Technical View: Trendline breakout must for Nifty 50, Bank Nifty to move toward new highs; India VIX favours bulls

Nifty Outlook for January 2

• Weekly options data continued to suggest 26,000–26,100 as a support zone for the Nifty 50, with resistance placed at 26,200–26,400.

Did our AI summary help?

The Nifty 50 witnessed consolidation within a narrow range of around 60 points on January 1, following a sharp rally in the previous session. The index closed higher, continued its uptrend, and maintained a higher high–higher low formation for the second consecutive session, supported by a bullish crossover in momentum indicators. It also sustained well above all key moving averages and inched toward the upper Bollinger Bands, while a subdued VIX favoured the bulls.

According to experts, the Nifty 50 must decisively surpass and hold above the falling resistance trendline, which lies slightly above the 26,200 zone, for a move toward the record high of 26,326. Until then, the index may continue to consolidate, with support seen at 26,050–26,000. Below this level, bears may come into action.

The Nifty 50 opened higher and climbed to an intraday high of 26,198, followed by range-bound trade during the remaining part of the session. The index finished at 26,147, up 17 points, and formed a small bearish candle with upper and lower shadows on the daily charts, following a long bullish candle in the previous session, indicating range-bound trade.

“Having formed a new higher bottom reversal pattern recently at 25,878 on Tuesday, the market is expected to move up further and decisively break above the hurdle of 26,200 levels after 1–2 sessions of consolidation,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

After moving above 26,200, the Nifty is expected to show a sharp breakout toward the 26,300–26,400 levels in the near term, while the immediate support is placed at 26,050, he added.

Weekly options data continued to suggest 26,000–26,100 as a support zone for the Nifty 50, with resistance placed at 26,200–26,400.

The 26,200 strike holds the maximum Call open interest, followed by the 26,400 and 27,000 strikes, with maximum Call writing seen at the 26,200, 26,350, and 27,000 strikes. On the Put side, the maximum Put open interest was observed at the 26,000 strike, followed by the 26,100 and 25,900 strikes, while maximum Put writing was seen at the 26,150, 26,100, and 26,000 strikes.

Bank Nifty

The Bank Nifty continued its upward journey for the third straight session, rising 130 points to close at 59,712 after consolidating within a narrow range. The index formed a small-bodied candle, reinforcing the view that neither bulls nor bears were willing to take decisive control during the session.

Now the index needs to give convincing close above previous day's high (59,770) as that could open the door for the psychological 60,000 mark, while support is placed in the 59,300–59,200 zone, according to experts.

After breaking out of a down-sloping resistance trendline in the previous session, the index reached near another falling resistance trendline. A decisive move above this level could open the door for the psychological 60,000 mark, while support is placed in the 59,300–59,200 zone, according to experts.

Momentum indicators showed further improvement, with the RSI rising to 61.95 and the Stochastic RSI climbing above the 80 zone. The MACD is on the verge of a bullish crossover, and the histogram has also moved closer to the zero line.

“The zone of 59,900–60,000 will act as the immediate hurdle. A sustained move above 60,000 is likely to trigger a continuation of the up move, opening the doors for a rally toward 60,600 in the near term,” said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.

On the downside, the levels of 59,200–59,100 remain crucial support, and a breach below this zone may pause the bullish momentum, he added.

Meanwhile, the India VIX, also known as the fear gauge, declined for the third consecutive session and reached near an all-time closing low, falling 3.06 percent to the 9.18 zone, favouring the bulls.