The Nifty 50 rallied 0.65 percent on above-average volumes on October 16, extending its gains for a second consecutive session as bulls maintained their grip on the market. The index sustained its position above short-term moving averages and the midline of the Bollinger Bands. Moreover, its 10-day and 20-day exponential moving averages (EMAs) continued to slope upward, indicating a strengthening short-term structure. However, the broader trend remains tilted in favour of the bears, as the index continues to trade below its medium- and long-term moving averages, including the 50-day and 200-day EMAs.
Going forward, the Nifty 50 needs to sustain follow-through buying next week and convincingly reclaim the 23,300–23,350 zone to extend its recovery. This range coincides with the 50-day EMA and the upper end of the bearish gap formed on September 24. A sustained move above this zone could open the door for a further rise towards 23,600–23,700. On the downside, the support base has shifted higher to 22,800–22,900 following a healthy rally of nearly 1,000 points from the October low of 22,180. The 22,550–22,600 zone remains a crucial support area, according to market experts.
After an initial hour of volatility following a positive opening, the Nifty 50 remained above the psychologically important 23,000 mark and closed at 23,146, its highest closing level since September 23. The index gained 149 points, or 0.65 percent.
On the daily charts, the index formed a bullish candle with a long lower shadow, indicating a positive bias and strong buying interest at lower levels. It also moved closer to the 38.2 percent Fibonacci retracement level at 23,173, measured from the decline between 24,774 and 22,180.
Momentum indicators also showed further improvement. The Relative Strength Index (RSI) climbed above the 50 mark to 52.81, accompanied by a positive crossover. Meanwhile, the Moving Average Convergence Divergence (MACD) maintained its bullish crossover and moved closer to the zero line, while the green histogram bars expanded for a third consecutive session.
For the week, the Nifty 50 advanced 2.78 percent, recording its strongest weekly gains since April 2026. The index also broke its six-week sequence of lower highs and lower lows, forming a long bullish candle with a lower wick on the weekly charts, indicating renewed buying interest.
Amol Athawale, Vice President of Technical Research at Kotak Neo, believes the short-term market structure remains positive. However, he said a buy-on-dips and sell-on-rallies strategy would be ideal for traders.
On the downside, 23,000 and the 20-day simple moving average (SMA), near 22,800, are likely to act as key support levels. On the upside, 23,300 and 23,500 could serve as crucial resistance zones, he said. Athawale added that a fall below 22,800 could alter market sentiment, in which case traders may consider exiting their trading long positions.
Weekly options data suggest that the 23,500 strike, which has the highest Call open interest, could pose a major hurdle for the index next week. The 23,200 strike, which has the next-highest Call open interest, is likely to act as an immediate resistance level.
On the downside, the 22,700 strike, which has the highest Put open interest, could provide crucial support. The 22,900–23,000 strikes, which have the next-highest Put open interest, are expected to offer immediate support.
Meanwhile, the India VIX remained unchanged at 14.02 and continued to trade above most of its key moving averages, indicating that caution is warranted among bulls. A sharp decline in the volatility index towards and below the 12 mark could provide greater comfort to bullish traders.
Bank Nifty
The Bank Nifty extended its gains for a second consecutive session but failed to move above the previous day's high of 56,050–56,100, a zone that also coincides with the 50-day EMA. A decisive move above this range is crucial for further upside towards 56,500–56,700, followed by 57,000, which remains a key hurdle for strengthening the bullish bias.
The banking index rose 33.5 points, or 0.06 percent, to close at 55,844. On the daily charts, it formed a small-bodied bearish candle with a minor upper shadow and a long lower shadow, indicating range-bound trading as the index remained within the previous day's range.
The RSI stayed above the 50 mark at 51.91, accompanied by a positive crossover. The MACD also maintained its bullish crossover, with the green histogram bars expanding throughout the week. These indicators point to improving momentum, although the index still needs to clear key resistance levels to confirm further upside.
On the positional front, consolidation continues, and a decisive breakout is required to establish the next directional move, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.
According to Shah, the 55,200–55,300 zone will act as immediate support. A breakdown below this range could expose the index to renewed selling pressure, potentially dragging it towards 54,800.
On the upside, 56,300–56,400 remains the immediate resistance zone. A decisive breakout above this range could attract fresh buying interest and propel the Bank Nifty towards 56,700–57,000, he said.
For the week, the Bank Nifty advanced 1.06 percent, extending its gains after a 1.48 percent rally in the previous week. The rise was accompanied by robust volumes. On the weekly charts, the index formed a bullish candle with a minor upper shadow and a noticeable lower shadow, indicating a continuation of the positive trend. It also maintained its higher-high, higher-low structure for another week.
Report Written by Sunil Shankar Matkar
Source:Network18
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