Trade Setup For Oct 27: Nifty Finds Strong Support At 25,700

The benchmark NSE Nifty 50 index has found immediate support at 25,500–25,700 on the downside, according to analysts from Bajaj Broking Research.

"On the downside, the 25,500–25,700 zone is expected to act as a strong support area, backed by the 38.2% Fibonacci retracement of the recent rally (24,587–25,782) and the previous breakout zone," Bajaj Broking Research said.

On the weekly chart, the Nifty formed a high wave candle with a higher high and higher low, signalling consolidation amid stock-specific action after the recent sharp up move, according to the brokerage.

The indices ended in red on Friday, dragged by HDFC Bank Ltd. and Hindustan Unilever Ltd.

Conversely, on the upside, immediate resistance was identified at 25,950, followed by 26,000 and 26,100, according to Hardik Matalia, derivative analyst at Choice Broking.

"A sustained move above these levels would confirm the continuation of the bullish trend, while failure to cross them may keep the short-term trend range-bound," Matalia said.

According to Bajaj Broking, the Nifty had entered the overbought zone, indicating the likelihood of a short-term consolidation at higher levels as can be seen in last two sessions.

"We anticipate the index to trade within the 25,600–26,100 range to cool off overbought conditions, while a decisive break above 26,100 could open the door for an up move toward 26,500 in the coming weeks," Bajaj Broking said.

The Bank Nifty index is expected to consolidate with positive bias according to Bajaj Broking Research, with immediate supports placed at 57,300-57,500 levels being the last week breakout area and a stronger demand zone observed near 56,800-56,500 levels.

If selling pressure re-emerges and the index decisively breaks below 57,400, it could trigger a further correction towards 56,900 and potentially beyond, according to Matalia. "On the upside, immediate resistance is seen at 58,000, followed by 58,300 and 58,700," Matalia said.