Consolidation Continues, but Structure Favors Bulls Above 25,600

Market Recap

The Nifty index continues to exhibit restrained momentum, characterised by sharp gap-up openings followed by narrow intraday consolidation. While a decisive breakout remains elusive, the index has consistently defended its critical support band, holding firmly above prior gap zones that have now transitioned into immediate support.

This repeated absorption of supply on declines has gradually shifted the near-term bias in favour of the bulls. A well-defined base is forming in the 25,700–25,600 range, which aligns with the 50-day moving average (DMA), reinforcing this region as a key defensive zone for buyers.

Currently hovering near the psychologically important 26,000 mark, the index appears poised for a potential breakout. A sustained move above this threshold could validate follow-through buying and unlock fresh upside momentum.

Structurally, the formation of higher lows while trading above key moving averages reflects steady accumulation at lower levels. A decisive breakout beyond 26,000 may trigger short covering along with renewed buying participation. However, maintaining stability above the 25,600–25,700 support corridor remains essential to preserve the constructive setup.

Wednesday’s session reinforced the prevailing sideways undertone. After a gap-up opening, the index held onto early gains and protected support levels, signalling active dip-buying interest. The index closed higher by 18.70 points at 25,953.85, reaffirming the broader buy-on-dips stance.

Technical View

From a technical perspective, the index appears to be in a continuation phase. Although the presence of a small-bodied candlestick reflects limited directional conviction, the broader structure indicates gradual strengthening in bullish momentum, with corrective phases being systematically absorbed.

The 25,600–25,700 region, previously a notable supply zone, has now evolved into a critical demand cluster. This area coincides with:

• The 0.618 Fibonacci retracement level
• The 50-DMA
• Key short-term moving averages

This confluence creates a significant inflection zone for the index.

Momentum indicators remain aligned with this constructive bias:

• RSI near 60, signalling easing selling pressure and gradual momentum improvement
• Price action sustaining above short-term averages

A sustained breakout above 26,000 could provide the trigger for momentum acceleration. Conversely, any pullbacks toward the 25,600–25,700 band are likely to be viewed as accumulation opportunities.

Derivatives Snapshot

Options data reflects a cautious but gradually improving undertone.

• Call writers have added aggressive positions at at-the-money and nearby strikes, capping immediate upside potential.
• Put writers have initiated fresh additions at lower strikes, suggesting expectations of a defined trading range with established support.

Key observations:

• 1.19 crore open interest at the 26,000 call strike, marking it as a formidable resistance barrier
• 65.50 lakh put additions at the 25,900 strike, reinforcing immediate support
• Put–Call Ratio (PCR) declined to 0.89 from 1.02, indicating relatively softer sentiment and near-term dominance of call writing

The derivatives setup suggests consolidation with resistance overhead, but defined support below.

Market Outlook

Nifty is displaying signs of bullish stabilisation by sustaining above short-term moving averages and establishing a firm base within the 25,600–25,700 zone.

Despite repeated gap-up openings, the index has consistently absorbed intraday declines — a sign of renewed buying interest at lower levels. A sustained follow-through above 26,000 could pave the way for a sharper short-covering rally.

On the downside, retracements toward the 25,600–25,700 band are likely to attract meaningful buying interest and encourage fresh accumulation. As long as this support corridor remains intact, the buy-on-dips strategy continues to remain favourable.

Traders should remain selective, disciplined, and tactically cautious while navigating this evolving consolidation phase.