Trade Setup For Jan 8: Nifty Support Slips To 25,900 As Bulls Lose Steam

The Nifty 50 index experienced a notable shift as its crucial support level dropped below the key 26,000 mark, marking the third consecutive day of decline on Wednesday. Market analysts suggest that the index is likely to remain in a consolidation phase, characterized by profit-taking at higher levels and sector-specific movements influenced by third-quarter earnings reports.

Critical Support and Resistance Levels

Bajaj Broking Research identifies a key support zone between 26,000 and 25,900 points. This range corresponds with the 50-day extended moving average and a rising demand line that reflects lows from the previous four months.

On the upside, 26,200 points is viewed as a critical breakout level for bullish momentum. Shrikant Chouhan, Head of Equity Research at Kotak Securities, notes that sustaining above 26,200 could propel the index further towards the 26,260-26,300 range.

Conversely, a fall below 26,070 points may trigger increased selling pressure, potentially pushing the market down to the 25,950-25,900 range. The recent price pattern features a doji candle accompanied by lower highs and lows, indicating ongoing consolidation with a corrective bias following last week’s strong rally.

Bank Nifty Outlook

The Bank Nifty index has immediate support at 59,500 points, with expectations to consolidate between 59,500 and 60,400 points. This consolidation may form a higher base supporting the next upward movement. Further downside support is identified in the 59,000-58,800 points range.

Maintaining levels above this support range is crucial to sustaining a positive market bias. A potential short-term target for Bank Nifty stands at 61,400 points, based on recent range measurements.

Market Closing Summary

On the trading day ending Wednesday, Nifty closed down by 37.95 points (0.14%) at 26,140.75. The Sensex also declined, settling at 84,961.14 points, down 102.20 points (0.12%).

Key Takeaways

  • The Nifty 50 support level has slipped below 26,000, entering a consolidation phase.
  • Critical support lies between 26,000 and 25,900, aligning with technical indicators.
  • Resistance is noted at 26,200 points; sustained movement above this may lead to gains.
  • Bank Nifty support zones are identified between 59,000 and 59,500 points.
  • Market exhibits signs of profit-taking and sector-specific trend influence from earnings.