Technical View: Trendline breakout, strengthening momentum signal Nifty’s move toward 26,000 as VIX cools; Bank Nifty hits record closing high

Nifty outlook for February 19

• Nifty expected to march toward psychological 26,000 in upcoming sessions, provided it sustains above 25,750
• 25,700–25,650 range may act as a support zone
• India VIX cools down further to 12.22, down 3.55%, signalling comfort for bulls

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The Nifty 50 extended its upward journey and closed above the previous day’s high for the third consecutive session on February 18. The index decisively broke out of the falling resistance trendline and closed four-tenths of a percent higher. Considering the strengthening momentum and the falling VIX, the benchmark index is expected to march toward the psychological 26,000 zone in the upcoming sessions, provided it sustains above 25,750. However, the 25,700–25,650 range may act as a support zone, experts said.

The Nifty 50 opened higher at 25,753 but could not sustain those gains and traded lower to hit an intraday low of 25,645. The index gained strength in the last couple of hours of trade and closed at 25,819, up 94 points (0.37 percent) amid rising volumes. It formed a bullish candle with a long lower shadow on the daily charts, indicating a breakout of the crucial gap resistance at the 25,750 level and buying interest at lower levels.

The index sustained above all key moving averages, with short-term moving averages trending upward. The RSI rose to 53.91 with a bullish crossover, while the MACD sustained above the reference line with improving strength in the histogram. All these indicators suggest strengthening momentum.

“The previous huge bullish opening upside gap of February 3 remains partially filled. This is a positive indication and could pull Nifty towards 26,000 and next to 26,350 levels in the near term,” Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said.

Immediate support is placed at 25,650, he added.

The weekly options data also signalled resistance for the Nifty 50 at the 26,000 zone, where the maximum Call open interest is placed, with immediate support at 25,700, followed by 25,500 being a crucial support level, where the maximum Put open interest has been observed.

Meanwhile, the India VIX, which measures expected market volatility, cooled down further to 12.22, down 3.55 percent, signalling comfort for bulls. A decisive fall below the 12 zone can bring major comfort for bulls.

Bank Nifty

The Bank Nifty continued to outperform the benchmark Nifty 50, rising 377 points (0.62 percent) to end at a new closing high of 61,551. The index formed a bullish candle on the daily timeframe and continued its higher high–higher low formation with strengthening momentum.

After taking support at its 20-day EMA three sessions ago, the banking index has been trending higher and has now posted three consecutive higher closes, reflecting improving short-term strength.

All key moving averages (20-, 50-, 100-, and 200-day EMAs) trended upward, and the index reached near its intraday record high as well as the upper Bollinger Band.

Further, the RSI zoomed to 64.86, and the Stochastic RSI climbed back above the signal line, while the MACD maintained a bullish crossover with a rising histogram, all of which aligned with the rally.

“The immediate resistance is placed in the 61,800–61,900 zone. Any sustainable move above this zone could result in Bank Nifty extending its up move towards 62,300, followed by 62,700 in the short term,” Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities, said.

On the downside, the 61,100–61,000 zone is likely to act as immediate support, he added.