Market Recap: Nifty and Bank Nifty Signal Oversold Reversal, Bulls Regain Control

Thursday was a volatile day, but Indian equity markets managed a strong comeback in the final hour. Both the Nifty 50 and Nifty Bank climbed from their lows and finished above key support levels, signaling a bullish shift. This recovery from oversold conditions suggests a short-term bounce, with technical and derivatives data pointing to fading bearish momentum.

Nifty 50: Signs of a Mean-Reversion Rally

The Nifty index rose by 21.95 points to close at 24,596.15, moving back above the key 24,500 level after a choppy session. A bullish pin bar near the day's low suggests buyers are returning, and a reversal from recent oversold levels may be underway.

✦ Technical Overview:

• A strong recovery from intraday lows and close above the 24,500 mark suggests bearish exhaustion.
• The index is trading below its 10-day EMA, indicating scope for mean reversion toward 24,780–24,800.
• RSI around 40 shows positive divergence, indicating momentum is turning.
• Support is seen at 24,450; dips toward this zone may attract fresh buying.

✦ Derivatives Insight:

• The Put-Call Ratio (PCR) surged from 0.60 to 1.02, signaling bullish sentiment returning.
• 24,500 PE holds the highest open interest (45.96 lakh contracts) – acting as strong support.
• 25,000 CE sees heavy call writing (53.04 lakh contracts) – posing immediate resistance.
• Overall option activity shows put writers gaining confidence, a bullish indicator.

✦ Volatility Check:

• India VIX fell 2.28% to 11.68, showing calm market sentiment even with global trade concerns.
• Low volatility suggests the market expects sideways to positive consolidation, not sharp declines.

Nifty Bank: Bulls Reclaim 55,500 with Conviction

The Nifty Bank index gained 110.95 points to finish at 55,521.15, bouncing back from earlier losses. A strong bullish candlestick suggests the recent two-week weakness could be ending, with a possible base forming near 55,000.

✦ Technical Overview:

• Price action shows a strong reversal pattern near key support, similar to a bullish pin bar.
• Resistance seen at 55,670–55,720. A breakout here could target 56,120–56,200.
• RSI near 40 with positive divergence signals reducing downside momentum.
• Support lies at 55,000–54,950, aligned with the 100-day EMA and demand zone.

✦ Derivatives Snapshot:

• 56,000 CE sees major call writing (12.59 lakh contracts), creating near-term resistance.
• 55,000 PE maintains highest put OI (9.22 lakh contracts), affirming strong support.
• PCR has risen from 0.72 to 0.79, hinting at a slow but steady bullish bias returning.

What This Means for Traders and Investors

• The market’s strong close, despite global concerns such as tariffs, highlights its underlying resilience.
• With short-term indicators in oversold zones, the recovery may continue in the coming sessions.
• A buy-on-dip strategy appears favorable, particularly in large-cap segments.
• FPIs are still holding short positions, so any short covering could help support the rally further.

Key Levels to Watch Next Week:

Outlook: Optimism with Caution

Thursday’s session may mark the beginning of a short-term rebound after recent weakness. The gains are mainly due to short covering and technical mean reversion, while changes in options activity suggest there could be more upside. Traders should watch for further strength, especially near resistance levels.

As long as key support levels stay in place, the market setup supports a gradual buy-on-dips strategy. With earnings season starting and changing macro factors, markets could stay volatile, but the short-term trend looks positive.