Bulls Lose Momentum as Nifty Posts Muted Expiry; Critical Support Retest Signals Caution

The Nifty index ended the November expiry on a subdued note, marking its third straight negative session as measured profit-taking dragged the market lower. Persistent follow-through selling below the 26,000 mark reflected a precise cooling of bullish momentum, pushing the index closer to a critical make-or-break zone. A decisive close below 25,800 now threatens to open the door to a deeper corrective phase.

On Tuesday, Nifty slipped 74.70 points to settle at 25,884.80, extending its lower-high formation and slipping below key support levels. Price action over the past few sessions has turned noticeably cautious, with repeated rejections at higher levels signalling strengthening dominance from sellers.

Technical View: Support Retest in Focus

The index has now entered a short-term corrective structure, trading precariously close to its 20-day EMA and horizontal support at 25,800. This confluence is expected to act as a temporary cushion; however, only a sustained rebound above this zone would help revive buying interest.

On the upside, the 26,000–26,100 range, earlier a strong support cluster, has now flipped into a formidable resistance. A convincing close above this pocket is essential for bulls to regain any meaningful control. Failure to reclaim this zone could expose the index to further downside pressure.

Until the index breaks decisively above 26,100 or slips below 25,800, the broader price action is likely to remain range-bound with a negative bias.

Momentum Indicators Turn Soft

The 14-day RSI has dipped below 60, indicating weakening momentum and reinforcing the need for caution. The indicator’s inability to hold its higher range adds to the short-term bearish undertone.

Derivatives Snapshot: Call Writers Tighten Grip

The derivatives setup continues to highlight a cautious market mood, with call writers aggressively building positions at key overhead strikes.
Key observations include:

• Heavy call writing at near-ATM levels suggests strong resistance in the higher zones.
  
  
• Put writers who are unwinding and shifting toward lower strikes in a defensive stance.
  
  
• The massive open interest of 71.40 lakh contracts at the 26,000 CE level underscores this level as a major ceiling.
  
  
• On the downside, 25,500 PE holds significant put OI of 45.27 lakh contracts, marking it as a secondary support area.
  
  

The PCR has edged up from 0.62 to 0.73, suggesting marginal improvement but still signaling a cautious sentiment environment.

Market Outlook

Nifty’s three-day decline, coupled with persistent lower-high formations, reflects fading bullish momentum. The index is now at a critical juncture, with the 20-day EMA near 25,800 serving as the last meaningful support. A breakdown below this level could accelerate weakness, potentially dragging the index toward 25,500.

On the derivatives front, call writers remain firmly in control of upper strikes, while put writers continue shifting downward—signalling guarded behaviour from bulls.

A decisive close below 25,800 could trigger further downside. Conversely, sustained trade above 26,100 would be required for bulls to regain strength and invalidate the current corrective phase.

Until then, traders are likely to maintain a sell-on-rise stance with caution.