The Nifty and Bank Nifty closed higher by a third of a percent after rangebound trading on December 27, lacking strength at higher levels. The Nifty 50 needs to surpass the 23,900-24,000 area for an upward move towards 24,300. However, falling below 23,700 (200 DEMA) could drag the index down to the 23,500 zone. Until then, rangebound trading may persist. The Bank Nifty is also facing a strong hurdle at 51,600 (100 DEMA). Above this, 52,000 is the level to watch, but as long as it sustains below 51,600, consolidation may continue with support in the 51,000-50,800 zone, experts said.

On Friday, December 27, the Nifty 50 climbed 63 points to reach 23,813, while the Bank Nifty advanced by 141 points to 51,311. The market breadth was slightly positive, with 1,268 shares rising and 1,233 shares declining on the NSE.

Nifty Outlook and Strategy

Rajesh Bhosale, Technical Analyst at Angel One

The Nifty remained confined within the range of the large bearish candle formed on December 20, resulting in four small candlesticks on the daily chart. As we approach the end of the calendar year, consolidation is likely to persist for the next few sessions. A decisive breakout from the recent trading range would be required to trigger a trending move.

On the downside, the zone around 23,600–23,500, aligning with last Friday’s low, acts as a critical support level. A breach below this range could reignite the downtrend, potentially driving prices towards 23,300–23,200. Conversely, resistance levels are seen at regular intervals, with the 200-day SMA at 23,900 and the psychological mark of 24,000 serving as immediate hurdles. A breakout above these levels could extend the bounce to 24,150–24,250.

Key Resistance: 23,900, 24,000

Key Support: 23,600, 23,500

Strategy: Traders should monitor these key levels to structure their strategies effectively. As per the "January Barometer" theory, the upcoming week holds significance, as the market’s performance during the early days of January often sets the tone for near-term trends.

Rajesh Palviya, Senior Vice President Research (Head Technical Derivatives) at Axis Securities

The Nifty held above the upward-sloping trendline and closed with 226 points in gains for the week. On the weekly chart, the Nifty formed a small bullish candle; however, it stayed within the high-low range of the previous week, indicating indecision among market participants. Moreover, the failure to surpass the 200-day Simple Moving Average (SMA) highlights a negative bias.

The chart pattern suggests that a sustained move above 24,000 could trigger buying momentum, potentially driving the index towards 24,150–24,300. In contrast, a drop below 23,700 may lead to selling pressure, pushing the index down to 23,500–23,200.

For the upcoming week, the Nifty is expected to trade within the range of 24,300–23,200 with a mixed bias. Additionally, the weekly Relative Strength Index (RSI), which is trending downward and positioned below its reference line, further supports a negative outlook.

Key Resistance: 23,900, 24,000

Key Support: 23,650, 23,500

Strategy: Sell Nifty around 23,950 with a stop-loss at 24,000, targeting 23,700–23,650.

Ameya Ranadive, CMT, CFTe, Senior Technical Analyst at StoxBox

The Nifty has managed to hold above the 200-day EMA, which has been a historically strong support zone since May 2023, often acting as a springboard for upward moves. However, the market remains largely sideways due to persistent FII selling and a strengthening Dollar Index, which has created cautious sentiment.

Options data indicates a narrow trading range, with significant Call writing at the 24,000 strike, marking a strong resistance zone. On the downside, support is evident at the 23,800 Put strike, followed by the 23,500 Put strike. The weekly chart also reflects a Bullish Harami pattern, indicating the potential for a reversal if key levels are breached.

Key Resistance: 23,800, 24,000

Key Support: 23,700, 23,500

Strategy: Considering the historical significance of the 200-day EMA and the Bullish Harami pattern, buying the Nifty around 23,600 is advisable, with targets of 23,950–24,050. This view will be negated if the Nifty closes below 23,500. Sustaining above 23,800 could trigger the unwinding of positions, potentially driving a sharp rally toward 24,000.

Bank Nifty - Outlook and Positioning

Rajesh Bhosale, Technical Analyst at Angel One

Every week, the Bank Nifty index has consolidated within the prior week’s large down bar, reflecting a lack of follow-through. Coupled with its crucial location near the 200-DSMA and prior swing low, this offers some hope for buyers. However, the presence of strong resistance in the 51,900–52,000 range, caused by a bearish gap, along with the proximity of the 20 DEMA and 50 DEMA, poses significant headwinds to any upward movement. Unless we see a closure of the bearish gap, it would be prudent to treat any bounce as an opportunity to consider short positions.

Key Resistance: 51,900, 52,200

Key Support: 51,000, 50,500

Strategy: The repeated failure of the index to convincingly sustain above the 51,900–52,000 zone highlights the presence of stiff resistance in that area. Traders should use any bounce to lighten up on longs and consider creating fresh short positions.

Rajesh Palviya, Senior Vice President Research (Head Technical Derivatives) at Axis Securities

The Bank Nifty remained largely consolidated for the week after the sharp decline experienced in the previous week. The index closed with a 552-point gain for the week. On the weekly chart, a small bullish candle formed; however, the index remained within the high-low range of the prior week, indicating a lack of directional strength.

Importantly, the index encountered significant resistance within the bearish gap area between 52,010 and 51,790. The chart suggests that a sustained move above 51,750 could stimulate buying, pushing the index towards 52,000–52,500. Conversely, if the index breaks below 51,000, it may trigger selling pressure, dragging it down to the range of 50,600–50,400.

For the upcoming week, Bank Nifty is expected to trade within the range of 52,500–50,400, with a mixed bias. Additionally, the weekly RSI, currently in negative territory and below its reference line, emphasizes a bearish undertone.

Key Resistance: 51,500, 51,700

Key Support: 51,100, 50,850

Strategy: Sell Bank Nifty near 51,700, with a stop-loss at 51,900, targeting 51,400–51,250.

Ameya Ranadive, CMT, CFTe, Senior Technical Analyst at StoxBox

The Bank Nifty held above its 200-day EMA, a crucial support level since early 2024. However, resistance at the 50-day EMA has capped gains, leading to profit booking throughout the week. The index remains in a tight range, reflecting indecisiveness in the market.

Options data suggests a rangebound outlook, with resistance at 52,000 and support at 51,000. Notably, the weekly chart exhibits a Bullish Harami pattern, signaling potential recovery if key resistance levels are breached. A breakdown below 51,600 could test supports near 51,000.

Key Resistance: 51,650, 52,000

Key Support: 51,000, 50,800

Strategy: Traders can leverage theta decay by shorting the 50,800 Put strike at Rs 550 for the January 29 expiry, aiming for a target of Rs 350. The view will be negated if the premium rises and closes above Rs 700. With Bank Nifty at support levels, a breakout above 51,650 may lead to a stronger upward move.