Nifty trades in consolidation zone; range-bound structure keeps traders cautious

Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities

Nifty index witnessed a volatile yet range-bound session and closed marginally lower by 0.14% at 23,618, reflecting indecisiveness in the broader market after the recent corrective phase. Despite intraday swings, the index managed to hold its crucial support base near 23,300-23,250, indicating that buyers are still actively defending lower levels, while upside momentum continues to face supply pressure near higher resistance zones.

On the daily chart, the index remains below its 20-DEMA placed near 23,835 and is struggling to reclaim the 0.382 Fibonacci retracement zone near 23,770, suggesting that the short-term structure continues to remain in consolidation mode with a cautious undertone. Technically, the market is currently undergoing a time-wise correction rather than a sharp price-wise breakdown, which generally indicates gradual absorption after a strong directional move. The recent candle formations highlight lack of aggressive follow-through selling despite repeated resistance failures, reflecting that the market is attempting to create a near-term equilibrium zone before the next directional expansion.

Momentum indicator RSI is hovering near 45, reflecting neutral-to-weak momentum and indicating that participation from both buyers and sellers remains balanced at current levels. The RSI sustaining below the neutral 50 mark also suggests that recovery momentum still lacks broad-based strength. Meanwhile, India VIX cooled off towards 18.67, indicating that volatility is stabilizing after recent sharp swings, which is gradually reducing panic sentiment and supporting range-bound price action.

From a derivatives perspective, aggressive call writing near 23,800-24,000 continues to cap immediate upside momentum, while meaningful put writing near 23,500-23,300 is creating a strong demand zone on declines. PCR stands near 1.03, reflecting balanced positioning and suggesting traders are waiting for a decisive trigger before building aggressive directional bets.

The overall setup suggests that the index is currently trapped in a broader consolidation band where stock-specific action and tactical trading opportunities are likely to dominate in the near term. As long as the index sustains above 23,300, a "buy on dips near support" strategy may continue to remain favourable for a pullback towards 23,770-24,000. However, only a decisive close above 23,850 would confirm fresh bullish momentum, while a breakdown below 23,300 could again accelerate weakness towards 23,000-22,900 levels.

Source : Equity Bulls

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