Range-Bound Nifty Awaits Policy Cues; Bulls Eye 26,150 for Momentum Revival

The Nifty index continued to trade in a tight range ahead of the upcoming monetary policy announcement. After four consecutive negative sessions, the index managed to close slightly in the green, but still failed to post a convincing breakout above the previous day’s high. This price action signals time-wise consolidation rather than a deeper correction, with selling pressure emerging on intraday rallies and buyers stepping in near key support levels.

On Thursday, the index gained 47.75 points to close at 26,033.75, forming another indecision candle, its second in a row, within a broad trading band. Nifty currently trades near its crucial 20-DEMA, a level that has historically acted as a reliable trend support during corrective phases.

Technical Analysis: Nifty at a Critical Inflection Point

Nifty has printed back-to-back Doji candles, indicating heightened uncertainty among market participants ahead of the policy event. The index is hovering near a cluster of strong supports, while overhead supply zones continue to cap any meaningful upward movement.

Key Technical Levels to Watch

• Immediate Resistance: 26,150
  This level aligns with the recent swing lows and acts as a strong supply pocket. A decisive close above this zone is required for any momentum revival.
  
  
• Upside Target on Breakout: 26,350
  Clearing 26,150 can trigger short-covering, opening the path toward the next resistance zone.
  
  
• Nearest Support Range: 25,900–25,800
  This area marks the 0.382–0.50 Fibonacci retracement cluster, making it a crucial make-or-break zone for bulls.
  
  
• Trend Indicator:
  The 14-day RSI has slipped toward the 55 mark, reflecting a drift toward neutral territory and supporting a range-bound outlook.
  
  

As long as Nifty sustains above 25,800, the bias is likely to remain neutral-to-sideways, with dips attracting buyers. A directional move will only emerge once the index breaks out of this congestion zone.

Derivatives Snapshot: Traders Expect Consolidation

The derivatives setup mirrors the indecisive price action in the spot market, with traders adopting a cautious stance.

Important OI Trends

• Call Writing Dominance:
  Massive call writing has emerged in at-the-money and slightly out-of-the-money strikes.
  
  
  • 26,100 strike has nearly 97.49 lakh call contracts, establishing it as a heavy resistance ceiling.
    
    
• Put Open Interest:
  Put writers have reduced exposure and shifted positions to lower strikes.
  
  
  • 26,000 strike holds 1.00 crore put contracts, marking it as a critical support base.
    
    
• Put-Call Ratio (PCR):
  PCR has recovered to 0.80 from 0.68, but still stays in the bearish zone, indicating persistent caution from market participants.
  
  

This overall OI structure suggests a sideways-to-mildly-negative bias, unless a breakout above 26,150 reignites bullish sentiment.

Market Outlook: Breakout Above 26,150 Is Crucial

Nifty remains stuck in a broader consolidation zone with compressed volatility. The upcoming monetary policy event is expected to act as a catalyst for the next directional move.

Bullish Scenario

• A sustained close above 26,150 is essential to trigger momentum.
  
  
• Such a breakout could lead to short-covering, propelling the index toward 26,350.
  
  

Bearish Scenario

• A breakdown below 25,800 may tilt sentiment decisively in favour of the bears.
  
  
• In such a case, a deeper downside could emerge as support clusters get violated.
  
  

Most Likely Near-Term Scenario

• With Nifty trading close to key support and resistance levels, a range-bound setup remains the most practical expectation.
  
  
• Traders may continue to adopt a wait-and-watch approach until more clarity emerges post-policy announcement.
  

Conclusion

The Nifty index is currently navigating a phase of compressed volatility and directionless movement, waiting for policy cues to determine its next trend. Immediate resistance at 26,150 continues to be the key hurdle for bulls, while the 25,900–25,800 support band remains essential for defending the uptrend. Until the index breaks out of this congestion, sideways trading with buying on dips is likely to dominate the near-term market landscape.