Nifty Rebounds Sharply: Signs of a Short-Term Reversal Emerge

Thursday’s trading was volatile, but the Nifty index managed a strong comeback, closing above 24,500 after dipping earlier in the day. It finished up 21.95 points at 24,596.15. The daily chart showed a bullish pin bar candlestick, which often signals a possible reversal and suggests buyers are returning. This could mean an upward trend in the near future.

Expiry Day Drama: A Classic Case of Short Covering

Thursday’s trading showed the usual volatility seen on expiry days. The index dropped below its short-term averages early on, but a strong recovery in the last hour erased those losses and surprised short sellers. This move led to a solid close and was the first positive sign of a technical bounce after several weak sessions.

The 24,500 level proved to be strong support, with buyers stepping in firmly. This area remains a key level for traders and shows the market’s resilience, even with ongoing global concerns.

Technical Outlook: Bulls Regain Control Near Support

• A bullish pin bar formed near 24,500, which could signal a reversal. This pattern shows that buyers are ready to defend important levels and build a stronger base.

• If the index breaks above Thursday’s high, it could rally toward the 24,780 to 24,800 area in the short term.

• Immediate support is now at 24,450, matching a previous demand zone. If the index dips to this level, it will likely attract new buyers.

• Momentum Indicators: The RSI on the daily chart is hovering around 40 but is now showing signs of positive divergence—indicating that bearish pressure may be weakening. Meanwhile, intraday indicators suggest the index is rebounding from oversold levels.

Overall, the Nifty appears to be setting the stage for a near-term reversal. While the structure still remains mildly oversold, these technical cues signal potential upside if buying continues in the coming sessions.

Derivatives Data: Sentiment Turning Positive

The derivatives segment also supports the case for a bullish reversal:

• Open Interest Trends: A notable shift in market sentiment is visible as put writers have returned with positions at key levels. Open interest at the 24,500 strike has climbed to 45.96 lakh contracts—suggesting this level is now a solid support base.
• Resistance Formation: The 25,000 strike remains a hurdle, with open interest at 53.04 lakh contracts due to heavy call writing activity. This will act as a near-term cap for the index unless there’s strong follow-through buying.

• Put-Call Ratio (PCR): The PCR has jumped significantly from 0.60 to 1.02—indicating a growing bullish sentiment and the confidence of put writers in the market’s stability.

This renewed positioning closer to at-the-money levels reflects traders’ confidence in the market's ability to sustain gains, especially after recent declines.

Volatility Remains Tame Despite Global Noise

The India VIX declined by 2.28%, closing at 11.68, signaling that traders are not overly anxious despite global headwinds such as trade-related tensions. The low volatility suggests that while caution persists, the broader market isn't pricing in any sharp downside in the immediate term. This environment supports a ‘buy-on-dips’ strategy, especially if accompanied by supportive technical cues.

Market Outlook: Buy on Dips as Optimism Returns

The Nifty’s strong rebound from intraday lows and the emerging technical structure both point toward a potential reversal. The shift in derivatives positioning—especially the confidence of put writers—is a key signal that market participants are beginning to see value again at current levels.

Additionally, foreign portfolio investors (FPIs) remain in oversold territory. If short covering begins from this cohort, it could further accelerate the upward momentum.

Key Levels to Watch:

• Support: 24,450 – 24,500

• Resistance: 24,780 – 25,000

• Outlook: Neutral-to-Bullish (Short Term)

As long as Nifty holds above 24,450, traders may look to initiate fresh long positions on dips. A break above 24,800 could confirm a short-term trend reversal, paving the way for a test of the psychological 25,000 level.