Nifty Holds Gap Support, Consolidates Below 26,000 Amid Gradual Bullish Bias

Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities

Market Recap

Nifty index has been exhibiting unusual price behaviour, marked by wide gap-up openings followed by a narrow consolidation range for the rest of the session. Despite the absence of strong directional follow-through, the index has decisively defended its critical support area, holding firmly above its gap boundaries, which are now acting as immediate support. This ability to absorb supply has gradually tilted the near-term bias in favour of the bulls. A strong base continues to form in the 25,700-25,600 zone, which aligns with the 50-Day moving average (DMA) and remains a key line of defence for the bulls.

The index closed higher by 173.60 points at 25,867.30, reinforcing the prevailing buy-on-dips approach.

Notably, the index is trading close to the psychological resistance of 26,000, and a sustained move above this level could confirm follow-through buying. The current price action highlights the strength of the underlying support and enhances the probability of a near-term upside move.

Structurally, the index continues to form higher lows while trading above its key moving averages, signalling sustained accumulation at lower levels. A decisive breakout above 26,000 could trigger short covering and attract fresh buying interest. However, holding above the 25,600-25,700 support band remains crucial to maintain a durable bullish structure.

Monday's session reflected a clear sideways undertone. Following the initial gap-up opening, the index managed to protect its gains and defended its support zone, indicating active buying interest on declines. The evolving base formation and price continuity suggest that bulls are gradually regaining control.

Technical View

From a technical standpoint, the index appears to be in a continuation phase. The price structure points toward gradually improving bullish momentum, with corrective declines being consistently absorbed. This improvement in price behaviour strengthens the case for the ongoing buy-on-dips strategy. A sustained move above the 26,000 mark could inject fresh momentum into the rally. Importantly, the 25,600-25,500 zone, which was earlier a strong supply area, has now transitioned into a key demand pocket. This region also coincides with the 0.618 and 0.50 Fibonacci retracement levels along with key moving averages, creating a strong confluence zone and a critical inflection point for the index.

Momentum indicators further support this view, as the Relative Strength Index (RSI) has moved above the 50 mark, indicating easing selling pressure and a gradual erosion of bearish dominance. A clean breakout above 26,000 could accelerate buying interest, while any corrective dips toward the 25,600-25,700 range are likely to be perceived as accumulation opportunities.

Derivatives Snapshot

Derivatives data reflects a cautious yet gradually improving undertone. Call writers have aggressively added fresh positions at at-the-money and nearby strikes, thereby capping the immediate upside. On the other hand, put writers have begun building positions at lower strikes, signalling expectations of a range-bound market with well-defined support levels. A significant open interest build-up of around 2.01 crore contracts at the 26,000 call strike underscores this level as a strong resistance. Meanwhile, the addition of nearly 1.49 crore put contracts at the 25,800 strike strengthens its role as an immediate support. The Put-Call Ratio (PCR) jumped sharply to 1.05, reflecting improving sentiment and a relative dominance of put writers.

Market Outlook

The Nifty index is showing clear signs of bullish stabilisation by sustaining above its short-term moving averages and building a solid base in the 25,600-25,500 zone. Despite the wide gap-up openings, the index has managed to hold its ground, with intraday declines being swiftly absorbed, indicating renewed buying interest at lower levels. A sustained follow-through above the 26,000 mark could pave the way for a sharper short-covering rally. On the downside, any pullback toward the 25,600-25,700 band is expected to attract strong buying interest and support accumulation. As long as these support levels remain intact, the buy-on-dips strategy is likely to remain favourable. Traders are advised to stay selective, disciplined, and cautious while navigating the evolving market structure.

Source : Equity Bulls

Keywords

SAMCOSecurities Nifty Sensex NSE BSE MarketCommentary