Range-bound Nifty signals consolidation before next directional breakout plays out

Derivatives Analysis Report - Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities

Nifty index witnessed a range-bound session and closed marginally higher by 0.17% at 23,659, indicating lack of aggressive directional momentum despite selective buying emerging near lower levels. On the daily chart, the index continues to trade below its 20-DEMA placed near 23,818 and the crucial 0.382 Fibonacci retracement zone, suggesting the broader short-term structure remains under pressure.

Technically, the index is witnessing a narrow consolidation band near 23,300-23,800, reflecting a phase of time-wise correction after the recent sharp volatility-driven move. Momentum indicator RSI is hovering near 45, highlighting subdued momentum and absence of strong bullish participation. Meanwhile, India VIX cooled towards 18.44, indicating volatility is gradually stabilizing, which may continue to keep the index confined within a broader trading range.

From a derivatives perspective, aggressive call writing near 23,800-24,000 levels is restricting immediate upside momentum, while meaningful put writing near 23,500-23,300 continues to provide a strong support base. PCR stands near 1.27, reflecting balanced positioning with selective accumulation on declines. The overall structure suggests the market is currently undergoing consolidation before the next directional move. As long as the index sustains above 23,500, a range-bound buy-on-dips strategy near support zones may remain favourable for pullback targets towards 23,850-24,000, while a decisive break-down below 23,500 could again trigger renewed selling pressure towards 23,300 levels.

Source : Equity Bulls

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