Technical View: VIX supports bulls; Nifty uptrend hinges on 25,200, Bank Nifty needs to surpass Tuesday’s high

Nifty Outlook for October 08

The Nifty 50 continued its uptrend and higher high–higher low structure for four consecutive sessions. However, there was profit booking at higher levels, signaling that the 25,200–25,250 zone is a crucial hurdle for the index. Despite the profit booking—especially after a strong rally of 600 points in the recent past—the trend remains favourable for the bulls, given the strength in technical and momentum indicators.

As long as the index holds the 25,000–24,900 support zone (midline of the Bollinger Bands on daily and weekly charts), it is likely to march toward the 25,200–25,250 zone. A move beyond this could open the path to 25,450 (the previous swing high), which remains a crucial resistance. On the downside, a break below this range could see 24,750 acting as significant support, according to experts.

On Tuesday, the Nifty 50 opened higher at 25,085 and remained in an uptrend for major part of the session. The index hit an intraday high of 25,221 in the last couple of hours of trade amid volatility, before witnessing some profit booking and closing at 25,108, up 31 points.

The index formed a small bullish candle with a long upper shadow, resembling a Shooting Star pattern (following the recent rally) on the daily charts. This is generally considered a bearish reversal pattern, but confirmation from the following session is required.

The Relative Strength Index (RSI) rose to 56.19 and continued trending upward with a bullish crossover, while the histogram showed further improvement, though it remained just below the zero line. The MACD is on the verge of a bullish crossover, and the Stochastic RSI maintained its positive crossover.

“After three consecutive confident closings, Nifty faced selling pressure near its resistance zone of 25,200–25,250 during Tuesday’s session, indicating that bulls might take a pause, leading to a possible short-term consolidation. However, as long as the index sustains above 24,900—where its 50-day EMA is placed—the outlook remains positive,” said Vatsal Bhuva, Technical Analyst at LKP Securities.

On the derivatives front, both Call and Put writers were active. The highest Call writing was seen at the 25,200, 25,300, and 25,400 strikes, while the 25,000, 25,200, and 25,100 strikes recorded the most Put writing.

The maximum Call open interest (OI) was placed at the 25,200 strike, followed by 25,500 and 26,000, while the 25,000 strike held the highest Put OI, followed by 24,500 and 25,100.

The weekly derivatives data indicated that the Nifty may trade in the 25,000–25,500 range in the short term.

Bank Nifty

The Bank Nifty also witnessed profit booking at higher levels but still managed to close 135 points higher at 56,239, forming a bullish candle with a long upper shadow on the daily timeframe. Notably, trading volumes remained above average for several sessions.

The higher high–higher low formation continued for the fifth consecutive session, and the overall uptrend remained intact for six days. Momentum indicators also remained supportive, with the RSI close to 65, strengthening histogram bars, and a bullish crossover in the MACD.

“Going ahead, the zone of 56,500–56,600 will act as a crucial hurdle for the index. A sustained move above 56,600 could trigger a sharp upside rally, potentially extending toward the 57,100 mark. On the downside, the zone of 55,800–55,700 will serve as an important support,” said Sudeep Shah, Head – Technical Research and Derivatives at SBI Securities.

Meanwhile, the India VIX—the fear gauge—lost its previous day's gains and closed at 10.05, down 1.4 percent. The index continues to trade below all key moving averages, especially short-term ones, indicating that bulls remain in a healthy position.

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