Nifty Rebounds from Demand Zone; Sideways to Bullish Momentum in Focus

The Nifty index staged a decisive rebound from its demand zone on Monday, with all major indices closing in the green — signaling that bulls remain firmly in control at key support levels.

Despite Friday’s steep sell-off, the index refused to extend losses, instead building a strong base near its previous demand area. The price action suggested that recent selling pressure was absorbed, as Nifty closed near the previous day’s high.

Monday’s recovery restored confidence among traders, with the index reclaiming its crucial 24,500 psychological support, firmly establishing the 24,340–24,300 band as a strong base.

📈 Closing Stats:

• Nifty: +221.75 points, at 24,585.05
  
  
• Intraday dips repeatedly turned into bear traps over the last three sessions, as buyers aggressively accumulated at lower levels.
  
  

Price structure now suggests a sideways-to-bullish bias. Unless the index breaches and sustains below 24,300, buying interest could lift Nifty toward 24,800 in the near term.

Technical View

• False Breakdown Trap: Nifty trapped late Friday short-sellers with a brief breakdown below 24,500, before reclaiming the level and closing comfortably above it.
  
  
• Range-Bound Action: Monday’s move stayed within Thursday’s range of 24,630 (high) and 24,340 (low) — levels that will be crucial for the next breakout.
  
  
• Key Levels in Focus: Sustained trade above the 100-DEMA at 24,590 could spark short covering.
  
  
• Support: Breakdown below 24,340 could drag the index towards 24,200 (200-DEMA).
  
  
• Resistance: A breakout above 24,630 could align with an unfilled gap and push prices higher.
  
  
• Momentum Indicator: RSI hovering near 40, showing no clear reversal signal yet.
  
  

Strategy: Range-bound setup favours a “range trading” approach until a decisive breakout occurs.

Derivatives Snapshot

• Open Interest (OI) Trend:
  
  
  • 25,000 Call: Heavy call writing with OI at 1.13 crore contracts — key resistance.
    
    
  • 24,400 Put: Highest put OI at 1.01 crore contracts — immediate support.
    
    
• Shift in Positions: Put writers have moved to higher strikes, while call writers remain firm at ATM levels — reinforcing sideways sentiment.
  
  
• PCR: Jumped from 0.48 to 0.99, signaling stronger bullish undertones.
  
  

Volatility Check

• India VIX: Rose 1.54% to 12.21 — still subdued.
  
  
• Despite global headwinds, the low VIX suggests consolidation over sharp correction, meaning caution is warranted but panic is absent.
  
  

Market Outlook

Nifty’s resilience at the demand zone and its well-defined 24,630–24,340 range indicate a market preparing for a breakout.

• Bullish Trigger: Break above 24,630 could fuel an upmove towards 24,800.
  
  
• Bearish Trigger: Drop below 24,340 could extend declines to 24,200.
  
  

FPI Positioning: Foreign Portfolio Investors have raised net short futures positions to 94%, showing bearish conviction still lingers despite oversold conditions.

Final Take: Until a breakout occurs, range trading remains the most sensible strategy, with an eye on volatility spikes as the index hovers near this critical zone.