Nifty Finds Stability as Gap-Support and 20-DEMA Reclaim Boost Market Sentiment

The Nifty index stabilised after a volatile week, reclaiming the 20-day Exponential Moving Average (20-DEMA) and forming a constructive recovery candle, a sign that buyers are once again defending key support levels. The benchmark index also moved back above the psychological 26,000 mark, creating a strong gap-support zone that is expected to cushion declines in the near term.

On Friday, Nifty climbed 148.40 points to close at 26,046.95, reflecting improving resilience as traders continued to buy on dips. However, to confirm a sustainable uptrend, the index must register a decisive move above the recent swing high of 26,200.

Derivatives Snapshot: Sentiment Turns Positive

The derivatives setup indicates a noticeable improvement in overall market sentiment.

Key Highlights

• Put writers added significant positions at at-the-money and nearby strikes, reinforcing strong downside support.
  
  
• Call writers partially unwound positions and shifted to higher strikes, signalling expectations of continued consolidation rather than sharp declines.
  
  
• A heavy open-interest buildup of ~1.19 crore call contracts at 26,500 marks this level as a firm resistance zone.
  
  
• Meanwhile, ~1.36 crore put contracts at 26,000 confirm it as a major support level.
  
  
• The Put-Call Ratio (PCR) increased to 1.13 from 0.84, indicating rising optimism and aggressive put writing by market participants.
  
  

Market Outlook: Range-Bound but Improving

Nifty’s late-week recovery established a firm demand zone, but the broader structure still appears delicate. The index continues to form lower highs, implying persistent supply near the 26,200 level.

Key Levels to Watch

• Support Zone: 26,000–25,900
  This band previously acted as a strong resistance and now serves as a crucial cushioning zone for any retracement.
  
  
• Resistance Zone: 26,200
  A breakout above this swing high is needed for a trend reversal and renewed bullish momentum.
  

What to Expect Next

• Bullish Scenario:
  A sustained breakout above 26,200 could trigger a rally toward 26,350, strengthening the case for a medium-term uptrend.
  
  
• Bearish Scenario:
  A breakdown below 25,900 may weaken the overall structure and accelerate selling pressure, potentially dragging the index toward 25,700.
  

Conclusion

Nifty’s reclaim of the 20-DEMA and the strong price action around the 26,000 mark signal stabilisation, supported by improving derivatives data. While the short-term trend is constructive, a clear breakout above 26,200 will determine whether the index can re-enter a sustained bullish phase. Until then, expect a range-bound movement with strong support on dips and resistance at higher levels.