Trade Setup For Dec 4: Nifty Support Slips To 25,900 As Bulls Lose Steam

The NSE Nifty 50 finds key support at around 25,900-25,700 levels, analysts said, as the index fell for the fourth consecutive session on Wednesday.

"Key support is placed at the 25,900-25,700 levels being the confluence of the bullish gap area of Nov. 12, the 50 days extended moving average and the lower band of the rising channel of the last two month," Bajaj Broking Research said.

Short term bearish sentiment for the index has begun to surface, according to Rupak De, senior technical analyst at LKP Securities who noted that the index has formed a bearish divergence on the daily chart.

"Besides, it has also fallen below a rising trendline, adding to the weakness in the market," De said.

"From here, if the index sustains the recovery — as expected after taking support at 25,900 — it may move towards 26,060 on the higher side, where it could face resistance once again, potentially triggering another decline," he added.

Bajaj Broking remarked that the current "breather" should be used to accumulate quality stocks for the next leg of upmove towards 26,500 levels in the coming weeks.

The Bank Nifty finds support at 58,900 levels, according to Rupak De. "On the daily chart, Bank Nifty took support near its 20-day EMA around 58,900 and sharply rebounded, suggesting that buyers are actively defending this level," he said.

De recommended a cautious stance despite the rebound due to the relative strength index remaining in bearish crossover.

Bank Nifty has formed a bullish candle with a long lower shadow signaling buying demand at lower levels from the 20 days EMA and the lower band of the rising channel, according to Bajaj Broking Research.

"We expect the index to consolidate and form a base in the range of 58,500-60,100 in the coming sessions ahead of the RBI monetary policy outcome," the brokerage said.

"A follow through strength above Monday’s high (60,114) will open further upside towards 60,400 and then towards 61,000 levels in the coming weeks," it added.