Nifty Stabilises Above Key Supports; Momentum Builds for Further Upside

Market Recap

The Nifty 50 index staged a tactical rebound from its key support zone, reclaiming the 200-day exponential moving average (EMA) and providing temporary relief to market participants. The index has successfully carved out a meaningful base in the 24,900–25,000 range, which coincides with the 200-day moving average (DMA) and now represents a critical line of defence for bulls.

The rebound was supported by a clear reversal setup and healthy follow-through buying, underlining the strength of the support zone and hinting at the possibility of continued upside momentum over the coming sessions. Notably, the index closed above the previous day’s high for the first time in 14 sessions, signalling short-covering activity and an early shift in market structure.

A decisive move above the 25,400 level could further accelerate short covering and attract fresh buying interest. However, sustaining above the 25,150–25,100 support band remains essential for any durable bullish continuation.

Tuesday’s session, despite ending in the green, was characterised by choppy and low-quality price action, with the index largely oscillating within a narrow range. Still, the evolving base formation and early reversal signals suggest that bulls are gradually regaining control. The Nifty closed 167.35 points higher at 25,342.75, reinforcing a buy-on-dips approach amid elevated volatility.

Technical View

From a technical standpoint, Nifty appears positioned near a potential breakout from a double-bottom formation, having established a firm base after the recent correction. The recovery from oversold conditions lends additional credibility to the rebound.

The 25,400–25,500 zone, which earlier acted as a strong demand area, has now turned into a critical supply zone. This area aligns closely with the downward-sloping 10-day EMA, making it a key inflection point for the index.

Momentum indicators suggest easing selling pressure:

• The Relative Strength Index (RSI) has moved above the 40 mark, signalling a gradual waning of bearish dominance.
  
  
• Any sustained breakout above 25,400 could intensify buying momentum.
  
  
• On the downside, pullbacks toward the 25,100–25,150 zone are likely to attract accumulation interest.
  

Derivatives Snapshot

The derivatives setup continues to reflect a cautious yet stabilising bias. Call writers have added fresh positions aggressively at at-the-money and nearby strikes, limiting immediate upside potential. Meanwhile, put writers have started adding positions at lower strikes, pointing toward expectations of a range-bound market with clearly defined supports.

• A significant open interest build-up of 53.79 lakh contracts at the 25,500 call strike highlights this level as a strong resistance.
  
  
• On the downside, 56.18 lakh put contracts added at the 25,000 strike reinforce it as a crucial immediate support.
  
  
• The Put–Call Ratio (PCR) edged marginally lower to 0.82 from 0.83, indicating continued caution and the prevailing dominance of call writers.
  

Market Outlook

Nifty is showing early signs of trend reversal, having reclaimed the 200-DMA and formed a strong base near the 24,900–25,000 support zone. The index closing above the previous session’s high for the first time in nearly two weeks reflects a revival in buying interest and short-covering activity.

A sustained move above 25,400 could trigger a sharper short-covering rally and improve near-term sentiment. On the downside, dips toward the 25,100–25,150 zone are expected to find strong support and may be viewed as buying opportunities.

As long as key supports remain intact, buy-on-dips strategies are likely to dominate, though traders should remain selective, disciplined, and cautious amid evolving market dynamics and persistent volatility.