Nifty 50 and Bank Nifty Eye Consolidation After Stellar Rally, Key Supports Set at 25,641 and 59,800

On February 3, the Nifty 50 opened near 26,300, a gap of more than 1,200 points, within moments of the announcement of a US–India trade deal. By the end of the first hour it had slipped back to about 25,641. For the rest of the session it drifted between 25,870 and 25,700, and it closed at 25,728. That was a gain of 639 points, or 2.55 percent. Ashish Kyal of Waves Strategy Advisors called the opening one of the sharpest gap-ups in recent years.

The Bank Nifty followed the same arc. It rose 1,422 points, or 2.43 percent, to finish at 60,041. It opened with a gap of around 2,800 points and touched a fresh record high near 61,764 in early trade. Profit booking then set in, and prices moved sideways. Kyal said public-sector and private banks contributed about equally to the rally. Breadth on the NSE was lopsided: roughly 2,494 shares attracted buyers, against 447 that came under pressure.

The analysts Moneycontrol consulted broadly expect the next few days to bring consolidation and range-bound trading, with the larger trend still favouring the bulls. For the Nifty, the first line to watch is 25,641, the previous day's low, which coincides with the 50-day exponential moving average. Holding above it could open the way toward 26,000, while a break below it puts 25,500 in focus. For the Bank Nifty, 59,800 is the level to defend. Below it, 59,450 becomes crucial. The immediate hurdle is 60,200, then 60,437.

Kyal argues that the sharp move erased nearly 14 days of prior correction in a single candle, which he reads as a sign that a significant low is in. He sets key support at 25,361 and key resistance at 26,300, and expects the index to head toward 26,200 and beyond while it holds above support. He also points to 25,728 as a volume-profile support, an area of heavy historical participation. His suggested trade is a long position if the Nifty approaches 25,550–25,580 and reverses on the 5-minute chart, with a stop-loss at 25,361 and targets of 25,730 and then 25,900.

Aditya Thukral of AT Research & Risk Managers notes that the Nifty closed above its 20-, 50-, 100- and 200-day EMAs, and that the slopes of those averages have turned upward. The upmove began just after Budget Day. He wants several more closes above 25,650 to strengthen it. A move this big, he says, calls for sideways action if not immediate follow-through. Derivatives data gives no directional signal, since aggressive option writing runs across the chain. He expects the index to stay between 25,500 and 26,000 for at least a couple of days. His resistances are 25,880 and 26,150, his supports 25,600 and 25,450, and he suggests buying futures on dips near 25,680 with a stop-loss of 25,580 and a target of 25,880.

On banks, Kyal recalls that the Bank Nifty sold off sharply on Budget Day after the STT hike, testing the lower edge of its rising daily trendline. It then rebounded nearly 800 points from that support at the start of this week. It now hovers near a polarity zone at 60,300. A move above that could extend the rally to a new record, while a break below 59,790 could bring an attempt to fill the gap. His key resistance is 61,700 and key support 58,700. He suggests going long above 60,300 with a stop at 60,000 and a target of 60,850.

Thukral sees a breakout from a falling trendline, in both price and the 14-period RSI. The banking index closed above its 20- and 50-day EMAs, which had acted as resistance in recent sessions. He sees higher highs and higher lows on every timeframe and notes derivatives positioning showing aggressive long build-up and short covering. His resistances are 60,300 and 60,550, his supports 59,850 and 59,500.

The views are the analysts' own, not Moneycontrol's. What to watch now is whether 25,641 and 59,800 hold through the expected consolidation.