Nifty Overview: Exhaustion Emerges After a Four-Week Winning Streak
The Nifty index ended the month of October on a strong note but began showing signs of fatigue toward the end of the week. After a solid four-week rally, the index has now erased its consecutive gains and hovers near a critical make-or-break zone.
A decisive move below Friday’s low of 25,700 could further weaken buyer sentiment and signal a shift in near-term momentum. On Friday, the Nifty extended its losing streak for the second consecutive session, closing 155.75 points lower at 25,722.10, marking another session below the previous day’s low — a sign of growing caution among market participants.
The formation of a Shooting Star candlestick on the weekly chart, along with a potential double-top breakdown near the 25,700 neckline, adds to the bearish undertone.
Technical Analysis: Key Levels and Structure
From a technical standpoint, Nifty appears to be entering a bearish-to-sideways phase as long as it fails to sustain above the 26,100 swing high. The index’s close below the 10-day exponential moving average (10-DEMA) signals a pause in bullish momentum.
Unless the 25,900–26,000 zone is decisively reclaimed, sellers are likely to stay in control, using minor upswings to initiate fresh short positions.
- Immediate Support: 25,700
- Secondary Support: 25,500
- Resistance Zone: 26,100–26,150
- Trend Bias: Bearish-to-Sideways
A decisive breach below 25,700 could confirm the double-top breakdown, potentially accelerating the downward move toward lower support zones. Conversely, a close above 26,100 will be required to restore bullish sentiment and confirm the next leg of the rally.
Momentum Indicators: Signs of Weakness Emerging
Momentum readings point toward fading strength. The RSI (14) has slipped below 60, indicating that bullish momentum is easing, while MACD continues to flatten, reflecting a loss of directional conviction.
Overall, 25,700 remains the crucial support to monitor, while the 26,100–26,150 zone acts as a strong resistance ceiling in the near term.
Derivatives Snapshot: Call Writing Dominates as Traders Turn Defensive
Derivatives data reinforces a cautious market tone, with call writers actively building positions at higher levels. Major put writers have shifted to lower strikes, indicating defensive positioning.
- 26,000 Call Strike: ~2.25 crore OI — strong resistance
- 25,500 Put Strike: ~85.74 lakh OI — base-level support
- Put-Call Ratio (PCR): Declines sharply to 0.49 from 0.60, reflecting bearish sentiment
The sharp increase in call writing at upper levels shows growing skepticism among traders, suggesting limited upside potential in the immediate term.
Market Outlook: Range-Bound to Bearish Bias Prevails
Despite ending October on a positive monthly note, the index is now displaying visible signs of fatigue. The emergence of a double-top formation on the daily chart and a Shooting Star on the weekly chart reinforces a cautious approach.
With call writers dominating at higher strikes, the bullish momentum has paused, and sellers are using rallies to initiate fresh short positions.
- A decisive move above 26,100 will be essential to revive bullish sentiment and resume the uptrend.
- Conversely, a break below 25,700 could trigger a deeper correction and invite further selling pressure.
Until a breakout occurs on either side, the market is expected to remain range-bound. Traders are advised to maintain a sell-on-rise strategy, focusing on shorting near resistance zones while staying cautious in the near term.
Key Takeaways
- Nifty ends October with strong gains but shows early signs of exhaustion.
- Double-top and Shooting Star patterns signal potential weakness.
- Support at 25,700 is critical; resistance capped at 26,100–26,150.
- Derivatives data shows aggressive call writing and cautious sentiment.
- Traders should adopt a sell-on-rise approach until a clear breakout emerges.
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