Healthy Pause Near Record Highs: Nifty Consolidates as Profit Booking Emerges

The Nifty 50 index is currently witnessing a phase of healthy consolidation near its all-time highs, following a strong rally that pushed the benchmark to a fresh record peak of 26,373 in the previous session. After facing resistance at higher levels, the index slipped below the 26,200 mark, reflecting orderly profit booking rather than any structural weakness.

Tuesday’s expiry session remained largely range-bound and subdued, with Nifty closing 71.60 points lower at 26,178.70. The muted price action suggests a pause to digest recent gains, indicating consolidation within an ongoing uptrend rather than a trend reversal.

Technical View: Bullish Structure Remains Intact

From a technical standpoint, the index has struggled to sustain higher levels and has re-entered a consolidation phase. The daily chart has formed an indecision candlestick, highlighting a temporary balance between buyers and sellers.

Despite this pause, the broader price structure remains constructive, with the higher-low formation intact. Importantly, Nifty continues to trade comfortably above its 10-day Exponential Moving Average (DEMA), reinforcing that the underlying bullish bias remains unchanged and that declines are being met with buying interest.

The 26,000–26,100 zone has now emerged as a crucial make-or-break support area. This region, which earlier acted as a resistance band, is expected to provide strong support. As long as the index holds above this zone on a closing basis, the probability of follow-through buying remains high, with buyers firmly defending key levels.

Momentum Indicators Signal Consolidation, Not Weakness

Momentum indicators are consistent with a consolidation phase. The Relative Strength Index (RSI) is hovering just below the 60 mark, indicating a brief pause after the recent rally and hinting at the potential resumption of bullish momentum once consolidation resolves.

Holding above the psychological 26,000 level keeps the buy-on-dips strategy relevant. A decisive breakout above the 26,350–26,370 resistance zone could reignite upward momentum and open the path toward fresh record highs near 26,500.

Derivatives Snapshot: Support Strong, Upside Capped Short-Term

The derivatives setup reflects the prevailing sideways bias in the cash market. Call writers have added fresh positions at at-the-money and nearby strikes, effectively capping near-term upside. Meanwhile, put writers continue to hold sizable positions at lower strikes, suggesting expectations of consolidation rather than a sharp corrective move.

A notable open interest build-up of nearly 49.81 lakh contracts at the 26,000 put strike firmly establishes this level as immediate support. On the upside, the addition of approximately 49.59 lakh call contracts at the 26,200 strike has emerged as a key resistance area.

The Put-Call Ratio (PCR) has eased to 0.73, indicating a cautious undertone and increased selling pressure at higher levels, which aligns with the ongoing consolidation.

Market Outlook: Buy-on-Dips Strategy Remains Valid

Nifty’s inability to sustain above record highs reflects healthy profit booking, not exhaustion of the broader uptrend. The persistent higher-low structure continues to underline strong underlying demand, with declines being absorbed near support zones—highlighting sustained investor confidence.

The 26,200–26,100 band remains critical for maintaining short-term stability. Continued put writing around at-the-money strikes suggests optimism that the broader trend remains intact. A sustained move above 26,370 could trigger short covering and propel the index toward 26,500 and beyond.

On the downside, any dips toward the 26,100 region are likely to attract buying interest, keeping the broader buy-on-dips approach firmly in play in the near term.