Muted Volumes, Firm Supports Keep Nifty Range-Bound; Breakout Still Elusive

Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities

Nifty index continued to remain confined within a broader trading range, marked by muted volumes and a lack of directional conviction. The benchmark is facing persistent supply near its breakout neckline, which is acting as a stiff overhead resistance. However, despite repeated intraday volatility, the index has managed to hold comfortably above its key support zones, underscoring that buyers are still defending lower levels. While selling pressure is visible near higher levels, the broader technical structure remains fragile and indecisive.

Notably, the index is hovering close to a strong demand zone while simultaneously encountering resistance at the breakout neckline. A sustained move above the crucial 26,250 mark could act as a catalyst for a sharp bullish acceleration in the coming sessions. On the flip side, a decisive breach below 25,900 would tilt the balance in favour of sellers and open the door for deeper corrective pressure.

On Friday, the Nifty traded in a narrow band, oscillating within its earlier range and closing almost flat. The index ended marginally lower by 99.80 points, settling at 26,042.30, reflecting continued hesitation among market participants.

From a trend perspective, the index continues to derive support from its 20-day exponential moving average (EMA), indicating that downside risks remain cushioned for now. The psychologically important 26,000 level has been firmly defended and now coincides with a cluster of key moving averages, strengthening its role as a near-term support base. Technically, the setup remains delicate, as the index has been locked in a broad consolidation phase, raising the probability of further range-bound activity in the near term. With both buyers and sellers actively protecting their respective territories, the market is witnessing a clear stalemate.

Momentum indicators echo this view, with the Relative Strength Index (RSI) hovering near the neutral 50 mark, signalling subdued momentum and the absence of a strong trend on either side.

Derivatives Snapshot

The derivatives data reflects a cautious and guarded market stance. Call writers have added fresh positions at at-the-money and nearby strikes, reinforcing overhead resistance and limiting upside attempts.

Meanwhile, put writers have reduced exposure and rolled positions to lower strikes, indicating expectations of continued consolidation rather than an immediate breakout.


A significant accumulation of nearly 1.98 crore call contracts at the 26,200 strike has established this zone as an immediate resistance. On the downside, the addition of around 1.51 crore put contracts at the 26,000 strike has created a strong support cushion. The Put-Call Ratio (PCR) has slipped to 0.65 from 0.91, reflecting cautious sentiment and suggesting that sellers continue to dominate at higher levels.

Market Outlook

Nifty remains devoid of a clear directional bias, firmly entrenched within its broader trading band. Declines are consistently being absorbed near support zones, while rallies are facing rejection near the breakout neckline, highlighting an ongoing consolidation phase. This persistent tug of war indicates that buyers are preventing sharp corrective moves, even as sellers continue to cap upside potential in the 26,200-26,250 resistance zone.

On the downside, the 26,000-25,900 region has emerged as a crucial demand area and will be key to maintaining short-term stability. Aggressive option writing near at-the-money strikes by both sides suggests heightened uncertainty and a lack of conviction regarding the next directional move.

A decisive breakout and sustained close above 26,250 could trigger a short-covering rally, potentially pushing the index towards fresh all-time highs near the 26,400 zone.

Conversely, dips towards 25,900 are likely to attract buying interest, keeping the broader range-bound structure intact in the near term.

Source : Equity Bulls

Keywords

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