Tech View: Nifty Forms Doji Candle But Crosses 200-DMA? What traders should do on Monday

Indian benchmark indices ended on a positive note (Friday, December 27) due to buying trend in auto, FMCG and bank stocks. While the S&P BSE Sensex rose 226.59 points or 0.29% to settle at 78,699.07, the Nifty gained 63.20 points or 0.27% to close at 23,813.40.

Commenting on the day’s action, Satish Chandra Aluri, expert, Lemon Markets Desk, said the benchmark indices failed to capitalize on the gap-up opening while managing to stay positive and close above the key level of 23,800 in a possible bullish signal.

“We continue to believe that markets are entering a new macro regime in 2025, with rising uncertainty over inflation and growth leading to higher interest rates in the US for longer periods. Earnings season along with budget expectations and Trump’s inauguration will be the next trigger for market direction in the new year,” he said.

What should traders do? Here’s what analysts had to say:

Hrishikesh Yedve, Asit C. Mehta Investment Intermediates

Technically, Nifty managed to cross the 200-day simple moving average (200-DSMA) on the daily chart but failed to sustain above it by forming a doji candle. On the weekly chart, the index has formed an inside bar candlestick pattern, indicating strong demand near the 23,500-23,540 zone. The 200-DSMA is placed around 23,860, which will act as an immediate barrier for the Nifty. A sustained move above this level could take the index towards 24,000–24,100. On the downside, 23,500 is key support. In the immediate term, the Nifty is expected to consolidate between 23,500 and 23,900, with a breakout on either side defining its next move.

Dhupesh Dhameja, SAMCO Securities

The Nifty index continues to exhibit a restrained sideways-to-bullish trajectory. Its narrow price movements, along with repeated indecisive candlestick formations, underscore the lack of clear direction. However, the absence of pronounced weakness and continued recovery efforts from lower levels are reassuring for the bulls.

The 23,900–24,000 zone, reinforced by heavy call writing, poses a significant barrier. Meanwhile, the 200-DEMA and the key 23,700–23,600 band, bolstered by significant put writing, form a solid foundation for the bulls. A breakout above 24,000 could trigger a short-covering rally, which would take the index towards 24,500.

However, until such a breakout materializes, a “buy on dips” strategy remains prudent. A break below 23,500, on the other hand, could increase bearish momentum, pushing the index towards the 23,150-23,000 zone, where strong put writing provides additional support.

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(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. These do not represent the views of Economic Times)