The Nifty 50 staged a rebound on Thursday, reclaiming key technical levels and snapping a seven-session losing streak. However, analysts said the index needs to sustain above higher resistance levels for the near-term trend to turn decisively positive.
Nandish Shah, Deputy Vice President at HDFC Securities, said the rebound helped the Nifty reclaim its 50-day DEMA at 24,188 and 100-day DEMA at 24,203, signalling an improvement in near-term momentum. However, the index continues to trade below its 20-day EMA at 24,304 and 200-day EMA at 24,377, indicating that the broader short-term trend has not yet turned decisively positive.
The 24,000 level remains a crucial support zone for the index. Shah noted that this level coincides with the 61.8% retracement of the previous upswing and an upward-sloping trendline connecting the April, June and July swing lows on the daily chart.
According to Shah, sustained buying above 24,375 will be crucial to negate the prevailing short-term downtrend and open the door for further recovery. Until then, the 24,000-24,050 band is likely to remain an important support area, while 24,300-24,375 could act as the immediate resistance zone.
The market rebound came after the Nifty had suffered seven consecutive sessions of losses. Ponmudi R, CEO of Enrich Money, said Indian equities recovered as easing pressure in global bond markets and resilient domestic buying outweighed persistent geopolitical concerns.
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"Indian equity markets rebounded on Wednesday, snapping a seven-session losing streak as easing pressure in global bond markets and resilient domestic buying outweighed persistent geopolitical concerns," Ponmudi said.
The Nifty opened with a gap-up and ended the session mildly higher, although trading remained subdued and largely range-bound through the day. According to Ponmudi, the lack of strong follow-through buying at higher levels kept the upside capped.
The contrasting technical signals suggest that the Nifty has improved from its recent lows but remains at a critical juncture. Reclaiming the 50-day and 100-day DMAs has strengthened near-term momentum, but the index still needs to overcome the 20-day EMA and 200-day EMA to establish a more convincing recovery.
Nifty Bank Outlook
Bank Nifty on Thursday continued to trade within a narrow range of 884 points over the past few sessions, indicating a lack of directional momentum. The key moving averages remain flat, while momentum indicators and oscillators are also suggesting a sideways trend in the near term.
According to Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities 57800-57900 zone is likely to act as a key resistance, while 57100-57000 remains an important support area. "A decisive breakout above 57900 or a breakdown below 57000 could trigger a strong trending move and set the tone for the index's next directional phase," said Shah.
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