Nifty Halts Five-Day Slide on Short Covering; Bulls Await Break Above 26,000

Market Recap: Nifty Snaps Losing Streak Amid Volatile Trade

The Nifty 50 index staged a measured rebound on Monday, snapping a five-session losing streak as short covering emerged at lower levels. After facing sustained selling pressure last week, the benchmark managed to close in positive territory, though confirmation of a durable trend reversal remains pending.

Nifty reclaimed the crucial 25,700 demand zone and closed back above its 100-day exponential moving average (DEMA)—a short-term relief for bulls. However, the index continues to trade below key resistance levels, and unless it sustains above the psychological 26,000 mark, sellers are likely to re-emerge on rallies.

The index recovered sharply in the latter half of the session, rising 106.95 points to close at 25,790.25, highlighting notable short covering activity. Intraday volatility remained elevated, underlining cautious market participation despite the bounce.

Nifty Technical Analysis: Range-Bound Structure Persists

From a technical perspective, the positive close after five consecutive declines is a constructive development, especially as the index defended the 25,700 support zone. The daily chart formed a pin-bar candlestick, reflecting buying interest near lower levels.

That said, the broader structure remains range-bound between 25,500 and 26,000, with a decisive breakout required to determine the next directional move.

Key Technical Levels to Watch

• Immediate Resistance: 25,900–26,000
• Major Resistance: 26,100
• Immediate Support: 25,700
• Strong Support: 25,500

The index is still trading below its 20-day and 50-day EMAs, both of which are now acting as overhead resistance. The 25,900–26,000 zone, which previously served as a strong demand area, has now turned into a formidable supply zone.

Momentum Indicators

• RSI: Hovering near 40, indicating sideways-to-bearish momentum
• MACD: Remains in negative territory, reflecting weak follow-through strength

A sustained move above 26,000–26,100 is essential to restore bullish confidence and signal trend resumption.

Derivatives Snapshot: Resistance Strengthens Near 26,000

The derivatives setup continues to mirror a sideways-to-bearish bias in the cash market.

• 25,500 Put Strike: Nearly 1.55 crore contracts in open interest, establishing a strong near-term support base
• 26,000 Call Strike: Around 1.79 crore contracts added, reinforcing it as a major resistance cap

The Put-Call Ratio (PCR) has improved to 0.87 from 0.48, reflecting a shift from extreme pessimism, though call writing dominance persists. This setup suggests expectations of range-bound trading with limited upside unless resistance levels are decisively breached.

Market Outlook: Cautious Bias Until Break Above 26,000

Nifty has managed to arrest the recent decline and reclaim an important demand zone, but the lack of follow-through buying keeps the broader outlook guarded.

The 25,500–26,000 range now clearly defines the near-term trading structure:

• A break below 25,500 could open the door for a deeper correction toward 25,350
• A sustained move above 26,100 is required to revive bullish momentum and signal a trend reversal

Until a clear breakout emerges, a range-trading or sell-on-rallies strategy is likely to remain the preferred approach for traders.

Final Takeaway

While short covering has provided temporary relief, Nifty’s broader trend remains cautious. Traders should closely monitor the 26,000 resistance and 25,500 support for directional clarity. In the absence of strong follow-through buying, volatility and consolidation are expected to dominate the near term.