Trade Setup for December 12: Nifty bulls look to reclaim 26,000 and reverse sell-on-rally trend

The market snapped its three-day losing streak as buying at lower levels lifted the Nifty to around 25,900, with nearly 40 stocks ending in the green.

After three sessions of weakness, the index saw a relief rally on Thursday. It opened firm but slipped soon after. Strong buying from the 25,700 support zone triggered a mid-session rebound, helping the Nifty finish near the day's high.

The index briefly slipped below its 50 DEMA in the first half hour but staged a sharp recovery, rebounding 229 points from the early low of 25,693 to close 140 points higher at 25,899.

Adani Enterprises, Jio Financial Services, and Tata Steel led the gains, while Asian Paints, SBI Life, and Bharti Airtel were among the key drags. Barring Nifty Media and Oil & Gas, all sectoral indices closed in the green, with Auto, Metal, Pharma, and Consumer Durables seeing the strongest action.

Broader markets also strengthened. The Nifty Midcap 100 rose 1% and the Nifty Smallcap 100 gained 0.8%.

The rupee slipped 41 paise to a record closing low of 90.37 against the dollar as heavy demand from importers, especially in precious metals, coincided with a spike in global metal prices.

On the policy front, the US Federal Reserve cut rates on Wednesday but signalled limited room for further near-term easing as it waits for clearer trends in employment and inflation. Projections also showed a divided view among policymakers on the rate path for 2026 and beyond.

FII selling continued for the 10th session, with outflows of ₹1,651 crore on Wednesday, while DII flows stood at ₹3,752 crore. Key data to watch include US jobless claims later today and India CPI and UK GDP tomorrow.

Nagaraj Shetti of HDFC Securities said the market is attempting to reverse its short-term downtrend and that a move above 25,950 to 26,000 could open the door to 26,250 to 26,300. Immediate support lies at 25,750.

Sudeep Shah of SBI Securities said the 50 day EMA zone of 25,750 to 25,730 remains a crucial support area. A break below 25,730 could trigger a deeper correction. On the upside, sustained trade above 26,000 may take the index towards 26,150.

Nandish Shah of HDFC Securities said that the Nifty has been repeatedly testing the 50 DEMA near 25,735 over the past three sessions, signalling consolidation around this zone. A decisive break below 25,735 could lead to declines towards 25,663 and 25,450.