Nifty Holds Gap Support, Consolidates Below 26,000 Amid Gradual Bullish Bias

Market Recap

The Nifty index continues to display unusual yet constructive price behaviour, characterised by wide gap-up openings followed by narrow intraday consolidation. Despite the lack of aggressive follow-through buying, the index has successfully defended its critical support zones, with the gap area now acting as immediate support.

This ability to absorb supply pressure has gradually tilted the near-term bias in favour of the bulls. A strong base is developing in the 25,700–25,600 zone, which coincides with the 50-day moving average (DMA) and remains a key line of defence for the ongoing recovery.

Nifty is currently hovering near the psychological resistance of 26,000. A sustained move above this level could confirm follow-through buying and enhance upside momentum. Structurally, the index continues to form higher lows while trading above key moving averages, signalling sustained accumulation at lower levels.

The Monday session reflected a sideways undertone, where the index opened with a gap-up and spent the rest of the session consolidating. Importantly, declines were actively bought into, highlighting improving sentiment. The index closed higher by 173.60 points at 25,867.30, reinforcing the prevailing buy-on-dips approach.

Technical View

From a technical perspective, Nifty appears to be in a continuation phase. Corrective declines are being consistently absorbed, pointing toward gradually improving bullish momentum. This price behaviour strengthens the case for maintaining a buy-on-dips strategy in the near term.

A decisive move above 26,000 could act as a trigger for fresh momentum and short covering. On the downside, the 25,600–25,500 zone, which earlier acted as a strong supply area, has now transitioned into a key demand pocket.

This zone also aligns with:

• 0.618 and 0.50 Fibonacci retracement levels
  
  
• Key short- and medium-term moving averages
  

The convergence of these indicators makes this region a critical inflection point for the index.

Momentum indicators are turning supportive as well. The Relative Strength Index (RSI) has moved above the 50 mark, indicating easing selling pressure and a gradual erosion 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 a cautious yet gradually improving undertone. Call writers have added fresh positions at at-the-money and nearby strikes, thereby capping immediate upside potential. At the same time, put writers have started building positions at lower strikes, suggesting confidence in the defined support levels.

Key observations:

• Open interest build-up of ~2.01 crore contracts at the 26,000 call strike, marking it as a strong resistance
  
  
• Addition of ~1.49 crore put contracts at the 25,800 strike, strengthening its role as immediate support
  
  
• Put–Call Ratio (PCR) rose sharply to 1.05, reflecting improving sentiment and growing dominance of put writers
  

Overall, the derivatives setup indicates a range-bound market with a positive bias, awaiting a breakout trigger.

Market Outlook

The Nifty index is showing clear signs of bullish stabilisation, sustaining above its short-term moving averages and building a solid base in the 25,600–25,500 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 open the door 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.

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.