NIFTY witnessed a relatively muted session on a closing basis, despite notable intraday swings. Opening slightly lower, the index saw buyers and sellers engage in an intense tussle for control. Buyers initially attempted to seize the initiative, but sellers effectively capped the upside as prices approached the previous session high. This triggered a gradual drift lower, followed by a prolonged phase of sideways consolidation. Eventually, the index settled at 25299, registering modest gains of 0.18% for the session.

The technical setup of the frontline index remains largely unchanged, with prices taking a much-needed breather following the sharp rally witnessed over the past few sessions. The formation of an inside-bar candle on the daily candlestick chart further underscores the ongoing consolidation. We remain consistent with the outlook outlined in our previous commentary. The sharp and relentless up move has pushed nearly all technical and market-breadth indicators into overbought territory, suggesting that the ongoing rally may be approaching a short-term point of exhaustion. Adding to this caution is the growing divergence between price and its short-term moving averages, which significantly increases the probability of a timewise or price-wise correction in the near term. Against this backdrop, while the underlying trend remains firmly bullish, the possibility of a near-term consolidation or corrective decline cannot be ruled out. Consequently, participants would be well advised to avoid chasing the ongoing momentum and instead look for opportunities to initiate fresh long positions on dips towards well-defined support zones, where the risk-reward proposition is likely to be more favorable.

In terms of levels, the 25100-25050 band is an immediate support, followed by a stronger support in the 24850-24750 band. On the flipside, 25350-25400 is likely to act as an immediate hurdle, followed by a stronger hurdle in the 25450-25500 zone.

Key levels to watch

NIFTY

Support: 25100- 25050

Resistance: 25350- 25500

BANKNIFTY

Support: 61100– 60500

Resistance: 61700– 61850

Hitesh Rathi, Technical Analyst – Equity & Derivatives, Angel One.