The Nifty 50 recovered from early losses on Thursday but remained trapped within a narrow trading range, leaving traders focused on the key 23,556 level for confirmation of a potential double-bottom breakout.
The benchmark index fell to an intraday low of 23,247 before buying emerged at lower levels, helping it recover more than 160 points. Nifty ended the session at 23,416.55, up 10.95 points, or 0.05%.
While the broader market recorded more advancing stocks than declining ones, index breadth remained slightly negative. Nifty traded within a 218-point range during the session, marking its narrowest range over the past five trading days.
The index has remained in a consolidation phase for nearly four weeks and has traded within a tight 23,151-23,556 band over the past three sessions. Market participants now await a decisive move beyond this range to determine the next direction.
Breakout Level Remains Key
Nifty formed a bullish candle on the daily chart following Wednesday's dragonfly doji pattern.
Despite the recovery, the index spent most of Thursday's session within the first-hour trading range. Although it briefly moved 20-25 points above the first-hour high, it failed to sustain those gains, indicating a lack of follow-through buying.
A move beyond either side of the 23,151-23,556 range could trigger a directional move of 200-300 points. The upper end of the range remains particularly important because it coincides with the neckline of a double-bottom formation.
For the bullish setup to strengthen, Nifty needs to close above the 8-day exponential moving average zone of 23,547-23,556. A sustained move above this band would confirm both a range breakout and a double-bottom breakout.
Momentum Signals Remain Weak
The broader technical structure remains unchanged as Nifty continues to trade below key moving averages.
The Moving Average Convergence Divergence, or MACD, remains below both its signal line and the zero line, indicating weak momentum. The histogram also points to a negative undertone.
Meanwhile, the 14-day Relative Strength Index remains flat and does not show any divergence.
Levels To Track On Friday
On the upside, the 50-day moving average at 23,678 and the 20-day moving average at 23,691 are expected to act as immediate resistance levels. Price action around these zones will determine whether the recent recovery can extend further.
On the downside, the 23,150-23,250 zone remains a critical support area. A close below this range could increase the risk of a deeper correction towards 22,700 over the medium term.
Stock To Watch: Global Health
Global Health, which operates the Medanta hospital chain, has shown renewed strength following a recent pullback.
The stock rallied more than 30% from its March low to its May swing high of Rs 1,278. During that advance, it also moved above a horizontal trendline resistance level, signalling an improvement in its price structure.
After reaching its May high, the stock retraced nearly 38.2% of the rally from the March low. The decline found support near the earlier breakout area and close to the lower Bollinger Band, making the zone technically significant.
On Thursday, the stock formed a bullish candle with an open-equals-low structure, indicating buying interest from the start of the session. It also reclaimed its 20-day moving average and now trades above key moving averages.
The 14-day RSI is also approaching the bullish zone above 60.
Based on these technical factors, Global Health can remain on traders' watchlists above the Rs 1,233-Rs 1,239 zone. Potential upside targets stand at Rs 1,318 and Rs 1,377, while a stop loss may be placed at Rs 1,150.
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