Nifty rallies over 320 points, forming a major bullish reversal candle; poised for new lifetime highs

Nifty staged a powerful comeback, recording its biggest single-day gain in nearly four months as expectations of further rate cuts and strong buying in heavyweights fuelled sentiment. The index entirely erased the last three sessions of declines with a decisive bullish engulfing formation, reaffirming the continuation of its upward trajectory. A sharp rebound from the 25,800 support zone once again validated this area as a strong demand base.

On Wednesday, the index surged 320.50 points to close at 26,205.30, reclaiming levels above 26,100 and reinforcing its higher-high, higher-low structure. The price action reflects rising dominance from buyers as broader market sentiment turns constructive.

Technical View: Strong Reversal With Bullish Marubozu Candle

Nifty delivered a sharp technical rebound, printing a bullish Marubozu candle that engulfed the prior three days of negative closes, signalling renewed optimism. The sustained base formation near the 20-DEMA around 25,800 highlights this zone as a firm demand pocket.

On the upside, the 26,250–26,300 region—coinciding with the previous all-time high—is the immediate supply zone. Given the current setup, the index appears well-poised for a breakout attempt. As long as Nifty holds above its support band, the broader trend remains upward, with every dip likely to attract fresh accumulation.

Momentum Indicators: Bullish Momentum Reignited

The 14-day RSI has moved back above 60, reflecting strengthening momentum and reaffirming the bullish undertone. In the near term:

• Key resistance: 26,300
  
  
• Strong buy-on-dips support: 25,800
  
  

A breakout above 26,300 could open the gates for new lifetime highs.

Derivatives Snapshot: Upward Bias Strengthens

The derivatives structure signals an apparent bullish tilt:

• Put writers aggressively added positions across lower and ATM strikes.
  
  
• Call writers unwound positions and shifted to higher levels, indicating upward expectations.
  
  
• A massive call OI buildup of 81.62 lakh contracts at 26,500 CE marks this level as a significant resistance.
  
  
• Strong put OI of 1.73 Crore contracts at the 26,000 PE reinforces this area as robust support.
  
  

The PCR jumped to 1.55 from 0.73, reflecting a sharp improvement in sentiment. However, readings in the over-extended zone may invite mild profit-booking.

Market Outlook

Nifty has delivered a decisive rebound from the 25,800 demand zone, forming a bullish reversal candle that completely engulfed the previous three declining sessions. With the index reclaiming the 26,100 level, the broader structure remains firmly positive and hints at an upcoming attempt to surpass previous record highs.

Derivatives action supports this view, with aggressive put writing and upward migration of call writing indicating increased bullish conviction. A sustained move above 26,280 could trigger further short covering and fuel an extended rally toward 26,500.

On the downside, any dips toward 26,000 are likely to serve as fresh accumulation opportunities, keeping the broader trend firmly in favour of buyers.