After volatile trades range-bound Nifty closes with positive undertone as support base strengthens

Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities

Nifty index traded in a highly volatile range and managed to close marginally positive at 23,649.95, up 6.45 points (+0.03%), indicating continued indecisiveness near crucial support zones. On the daily chart, the index is gradually stabilizing near the 23,400-23,600 region and attempting to form a short-term base after the recent corrective decline. The index is still trading below its 20-DEMA placed near 23,850 and below the key 0.382 Fibonacci retracement zone, suggesting that upside momentum remains capped despite the recovery attempt.

Technically, price action over the last few sessions indicates a base formation near lower levels, where repeated buying interest is emerging around the 23,300-23,400 zone. The formation of smaller candle bodies and reduced downside follow-through reflects absorption of selling pressure rather than aggressive unwinding. However, the inability to reclaim higher resistance zones suggests that traders remain cautious and are waiting for a decisive breakout confirmation before fresh directional positioning.

Momentum indicator RSI on the daily timeframe is hovering near 45 and has started witnessing a gradual recovery from lower levels, indicating weakening bearish momentum and early signs of stabilization. Meanwhile, India VIX rose sharply to 19.46, reflecting elevated volatility and continuation of sharp two-sided intraday swings despite the ongoing base-building process.

From a derivatives perspective, PCR stands near 1.35, indicating strong put writing activity and improving support formation at lower levels. Option data shows aggressive Put writing near 23,500-23,300 strikes, establishing a solid support base, while call writers remain active near 23,800-24,000 levels, restricting immediate upside momentum.

The overall setup suggests the market is entering a consolidation phase with stock-specific action dominating the broader trend. As long as the index sustains above 23,400, the buy-on-dips strategy may remain favorable for a gradual recovery towards 23,800-24,000 levels. However, a decisive breakdown below 23,300 could invalidate the ongoing base formation theory and trigger fresh weakness towards 23,100-23,000 levels.

Source : Equity Bulls

Keywords

SAMCOSecurities Nifty TechnicalView