Nifty Consolidates Below 26,000 as Bulls Defend Crucial Support Zone

Market Recap

The Nifty index continues to trade with subdued momentum, marked by sharp gap-up openings followed by tight intraday consolidation. While decisive directional follow-through remains limited, the index has consistently defended its critical support zone, holding firmly above the gap boundaries, which have now evolved into immediate support levels.

This resilience and ability to absorb supply at lower levels have gradually shifted the near-term bias in favour of the bulls. A robust base is developing in the 25,700–25,600 zone, which coincides with the 50-day moving average (DMA) and continues to act as a key line of defence.

Nifty is currently hovering close to the psychologically important 26,000 mark. A sustained move above this level could confirm follow-through buying. Structurally, the formation of higher lows while trading above key moving averages reflects ongoing accumulation at lower levels. A decisive breakout beyond 26,000 could trigger short covering and attract fresh buying interest, while holding above the 25,600–25,700 band remains crucial to preserve the bullish structure.

During the Tuesday session, the index displayed a clear sideways bias. After opening with a gap-up, Nifty managed to protect its gains and hold above its support zone, signalling active buying interest on declines. The index closed higher by 67.85 points at 25,935.15, reinforcing the prevailing buy-on-dips approach.

Technical View

From a technical perspective, Nifty appears to be in a continuation phase, even as the formation of a doji candlestick reflects limited directional movement. Despite this, the broader price structure indicates gradually improving bullish momentum, with corrective declines being consistently absorbed.

A sustained breakout above 26,000 could inject fresh momentum into the rally. Importantly, the 25,600–25,700 zone, which earlier acted as a strong supply area, has now transitioned into a critical demand pocket.

This region aligns with:

• The 0.618 Fibonacci retracement level
• Key short- and medium-term moving averages

This confluence makes it a key inflection zone for the index.

Momentum indicators further support the constructive setup. The Relative Strength Index (RSI) is hovering near the 60 mark, signalling easing selling pressure and a gradual weakening of bearish dominance. Any corrective dips toward the 25,600–25,700 range are likely to be viewed as accumulation opportunities.

Derivatives Snapshot

Derivatives data reflects an optimistic and gradually improving undertone. Call writers have aggressively added fresh positions at at-the-money and nearby strikes, thereby capping immediate upside. Meanwhile, put writers have begun building positions at lower strikes, suggesting confidence in defined support levels.

Key derivatives highlights:

• Open interest build-up of ~59.05 lakh contracts at the 26,000 call strike, marking it as a strong resistance
• Addition of ~38.70 lakh put contracts at the 25,500 strike, reinforcing it as immediate support
• Put–Call Ratio (PCR) at 1.02, reflecting improving sentiment and the dominance of put writers

Overall, the derivatives setup points to range-bound trade with a positive bias, awaiting a breakout trigger.

Market Outlook

The Nifty index is showing signs of bullish stabilisation, sustaining above its short-term moving averages and building a solid base in the 25,600–25,700 zone. Despite repeated gap-up openings, intraday declines are being swiftly absorbed, highlighting 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, any pullback toward the 25,600–25,700 band is expected to attract strong buying interest and support accumulation.

As long as these support levels remain intact, the buy-on-dips strategy is likely to remain favourable. Traders are advised to stay selective, disciplined, and cautious while navigating the evolving market structure.