Nifty Outlook: Index may retest 25,000 levels as bulls eye further upside

The bulls are back, as recent sessions have established a base around the key support of the 50-Day EMA, and last Friday's strong momentum suggests that prices are forming a structural bottom

Last week began quietly, and with the absence of positive momentum early on, Nifty edged lower ahead of the mid-week holiday on Thursday. However, as the markets reopened on Friday, improved global sentiments led to a strong gap-up opening. As the day progressed, it became an exceptional trading session for the bulls, erasing the sluggishness of the past few sessions and closing above 24500 with a gain of 1.65 per cent, finishing the week with an overall gain of 0.71 per cent compared to last Friday.

The bulls are back, as recent sessions have established a base around the key support of the 50-Day EMA, and Friday's strong momentum suggests that prices are forming a structural bottom. Prices have closed above the recent congestion zone, and a range breakout is visible on the hourly charts.

Additionally, Nifty has closed above the 20-Day EMA, which previously acted as resistance. With these technical indicators, it seems there’s more fuel for Nifty on the upside. In the upcoming sessions, we may see levels of 24,700 and 24,850 being tested, which could serve as immediate hurdles.

If global markets remain supportive, we might even retest the 25,000 level and beyond. Conversely, the bullish gap left last Friday around 24,200 is critical, the observations above hold as long as it is defended. However, if breached, the market may head back toward the lower levels of 24,000 and 23,900. Traders are advised to monitor these levels and consider a buy-on-dip approach.

We also observed broad-based buying, with strong performance in midcap counters, suggesting a stock- centric approach could uncover outperforming opportunities.

(Rajesh Bhosale is an equity technical analyst at Angel One Ltd. Views expressed are his own.)