Nifty on Verge of Outbursts as Technicals Converge: Analyst

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Long unwinding in Nifty was observed with over 1% drop in OI, accompanied by futures volumes rising over 40%.

By S JHA

Mumbai, December 18, 2025 — Nifty on Thursday swung between deep support to stiff resistance, in a day marked by high volatility. Nifty within a day dipped to test the formidable support at 25750. But the rise was capped at 25900 where aggressive call writing has been seen. During the day, indices gained strength from IT stocks, while others failed to rally.

Stating that index support helds, Angel One in its note shared with clients said: “Nifty ended flat after the 50-EMA once again acted as a cushion. The index bounced from the day’s low of 25,726 to close near 25,815.”

Noting that the market breadth has weakened, the brokerage stated that “underlying market health deteriorated further, with nearly 75% of Nifty stocks trading below their 5-EMA, highlighting broad-based weakness.”

Delhi-based brokerage also noted that the sectoral divergence was seen in IT outperforming the benchmark to emerge as the top gainer (1.2%), while Auto stocks led the decline.

On derivatives hinting unwinding, it stated that “long unwinding was observed with over 1% drop in OI, accompanied by futures volumes rising over 40% compared to yesterday, indicating profit-taking rather than fresh shorts.”

“Technically, the chart structure indicates that an outburst could occur soon, as the 20-day and 50-day EMAs are converging,” said the Angel One. It added that “on the levels front, the pivotal support is placed around the 25750-25700 zone, coinciding with 50 DEMA and lows from the previous week, which has facilitated a rebound, and a breakdown below the same could only disrupt the outlook and aggravate fresh shorts.”

On the other hand, said the analyst, the 20 DEMA at 25930, followed by 26000, represents a sturdy hurdle, and a sustained move beyond this could only provide a brief respite for market participants.

(Disclaimer: This article makes no recommendation for any kind of trades in the stock market)