Trading Plan: Can Nifty defend 50 DEMA, Bank Nifty take support at Wednesday’s low?

Nifty Trading Plan for December 18

The Nifty 50 moved closer to the crucial support zone of 25,750–25,700, which coincides with the 50 DEMA, the rising support trendline, and the lower Bollinger Bands. If the index decisively breaks and sustains below this zone, 25,500 cannot be ruled out in the upcoming sessions. However, 26,000–26,050 can act as a resistance zone. Meanwhile, the Bank Nifty reached 58,800 intraday on the downside for the second consecutive week. If the index convincingly breaks this level, 58,600–58,500 will be the levels to watch, followed by 58,300. On the higher side, 59,550 can negate the lower high–lower low structure, experts said.

On December 17, the Nifty 50 slipped 42 points to 25,819, while the Bank Nifty dropped 108 points to 58,927. Market breadth continued to favour bears, as 1,980 shares witnessed selling pressure compared to 873 advancing shares on the NSE.

Nifty Outlook and Strategy

Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities

For the third straight trading session, the benchmark Nifty index ended in negative territory, signalling a clear loss of momentum in the near term. Week-to-date, the index has slipped 0.86%, but the real pressure is visible in the broader markets, which continue to show pronounced weakness. Over the last three sessions, the Nifty Midcap 100 and Nifty Small Cap 100 have fallen more than 1.50%, raising concerns about the broader market structure.

Despite the visible weakness across the broader universe, the frontline Nifty index continues to hover above its crucial moving averages, offering a degree of resilience. However, momentum indicators are portraying a largely sideways structure, indicating a lack of strong directional conviction. Most interestingly, after hitting a fresh all-time high on December 1, the index has formed two lower tops, highlighting growing exhaustion and raising a crucial question about whether key support zones can hold the ongoing slide.

Going ahead, the 25,750–25,700 region will act as an important support zone for Nifty, as it aligns with both the 50-day EMA and a prior swing low. A sustained break below 25,700 could accelerate the corrective phase, potentially dragging the index towards 25,550. On the upside, the 25,930–25,950 zone remains a critical hurdle, and a decisive breakout above it will be essential for any improvement in near-term sentiment.

Key Resistance: 25,930, 25,950

Key Support: 25,750, 25,700, 25,550

Strategy: Sell Nifty Futures below 25,870, with a stop-loss of 26,000, targeting 25,600.

Nilesh Jain, Head – Technical and Derivatives Research Analyst (Equity Research) at Centrum Broking

The market remained under pressure, with Nifty facing strong resistance near its 21-DMA at the 26,020 level. However, the index managed to close above its key support at the 50-DMA, placed around 25,800.

From a technical perspective, it is crucial for Nifty to negate the lower-top, lower-bottom formation by moving above the previous high of 26,060. A sustained breakout above this level could open the door for a further rally towards the 26,250 zone.

Conversely, a breakdown below the 25,800 support may lead to additional weakness, with downside potential extending towards 25,650. Meanwhile, the volatility index, India VIX, is trading at multi-month lows below the 10 mark, which is likely to provide some comfort to the bulls.

(Spot levels)

Key Resistance: 25,930, 26,000

Key Support: 25,770, 25,690

Strategy: Buy Nifty Futures above 26,000, with a stop-loss of 25,850, targeting 26,300.

Rupak De, Senior Technical Analyst at LKP Securities

Nifty has remained in the bears’ grip, as the index stayed below the 21 EMA for yet another session, confirming a bearish short-term trend. The RSI also maintained a bearish tone, continuing with its bearish crossover. On the lower end, the index once again found support at the 50 EMA. However, repeated retesting of a moving average within a short span raises doubts about the strength of this support.

Overall market breadth remains weak. A decisive slip below 25,700 could trigger a correction towards 25,500–25,400. On the higher end, the 25,950–26,000 zone is likely to act as a crucial resistance area.

Key Resistance: 25,950, 26,000

Key Support: 25,700, 25,500

Strategy: Buy Nifty 25,700 PE of December 23 expiry at Rs 51, with a stop-loss of Rs 32, targeting Rs 90.

Bank Nifty - Outlook and Positioning

Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities

For the second straight trading session, the banking benchmark index Bank Nifty closed below its 20-day EMA, signalling continued pressure. What makes this decline more notable is that the daily RSI once again faced firm resistance near the 60 mark, indicating a shift in the momentum range from bullish to sideways as per RSI range shift dynamics. This behaviour suggests that buying strength is losing traction, raising questions about whether the index can hold its next set of critical support levels.

Going forward, the 58,700–58,600 zone will act as an important support area for Bank Nifty, as it aligns with the prior swing low and serves as a key reference point for traders. A sustained move below 58,600 could intensify the corrective phase and open the doors for a deeper decline towards the 58,000 level in the short term. On the upside, the 59,300–59,400 zone will remain a crucial hurdle for the index, and only a decisive breakout above this band will be an early sign of renewed strength.

Key Resistance: 59,300, 59,400

Key Support: 58,700, 58,600, 58,000

Strategy: Sell Bank Nifty Futures below 59,250, with a stop-loss of 59,600, targeting 58,500.

Rupak De, Senior Technical Analyst at LKP Securities

On Wednesday, Bank Nifty closed with weakness, forming a bearish candlestick and slipping below its key 21 EMA, which points to increasing selling pressure. Momentum indicators remain in a bearish mode, with the RSI making lower tops, reflecting a loss of strength in the index.

On the downside, immediate support is seen at 58,800, while resistance is placed near 59,300. A decisive break below 58,800 could lead to further downside towards the 50 EMA, placed at 58,315.

Key Resistance: 59,300

Key Support: 58,800, 58,350

Strategy: Buy Bank Nifty 58,800 PE of December expiry at Rs 283, with a stop-loss of Rs 240, targeting Rs 400.

Nilesh Jain, Head – Technical and Derivatives Research Analyst (Equity Research) at Centrum Broking

Bank Nifty remained under pressure and slipped below its 21-DMA, which is placed around the 59,300 level. The index is underperforming the Nifty due to persistent selling pressure at higher levels. It is nearing a potential breakdown from a Head and Shoulders pattern on the daily chart, with the neckline support located near 58,800. A decisive break below this support could lead to further downside towards the 58,500 level.

Earlier, a negative divergence was observed on the RSI, which continues to trend lower, signalling increasing weakness ahead. On the upside, a sustained move back above 59,300 could trigger short covering and push the index towards 59,800.

At present, the trend remains unclear and confirmation is still awaited. Therefore, traders are advised to stay on the sidelines and avoid initiating fresh positions until a clearer direction emerges.

(Spot levels)

Key Resistance: 59,300, 59,650

Key Support: 58,800, 58,350