Trade Setup for December 29: Protecting 26,000 key for Nifty as volumes continue to dwindle

With the year drawing to a close, the market is confined to a very narrow range. Through the entire last week, the range on the Nifty has been less than 150 points. After reclaiming 26,000 at the start of the week, the bulls have managed to hold on to that level, although the last two sessions have been a slow grind downward.

The five-day streak of making higher-highs and higher lows on the charts was also broken on Friday, when the Nifty was on the verge of breaking below the 26,000 mark, but managed a close above that.

That 26,000 mark remains the key for the Nifty going into the final three trading sessions of 2025, a year that has been a very volatile one to say the least. On the upside, 26,200 remains a hurdle for the Nifty, as despite crossing that mark on Tuesday and Wednesday, the index could not sustain above those and close above that mark.

Rajesh Bhosale of Angel One said that the immediate support for the Nifty on the downside is at 25,900, followed by a firmer base of 25,700, to maintain the near-term trend. On the upside, the 26,250 - 26,350 zone is a key hurdle, and a break above that could take the index into unchartered territory. He advises a buy-on-dips approach with the above-mentioned levels.

"Going ahead, for Nifty, the zone of 25,950 - 25,900 will act as crucial support. Any sustained move below the 25,900 level could lead to Index extending its weakness further down towards the 25,800 level, followed by 25,600. On the upside, the zone of 26,200 - 26,250 will act as a strong resistance for the index," Sudeep Shah of SBI Securities said.

The broader markets have borne the major brunt of that volatility, even as the Midcap index hit a record high towards the close of the year.

Even as the screen on the broader markets shows very little change, the advance decline of double the stocks declining compared to those advancing, is not something that the bulls will be happy with. And this comes despite sectors such as the Railways and Metal stocks outperforming with large volumes.

Railway stocks have been on a tear in the week gone by, with seven out of the top 10 weekly gainers on the Nifty 500 being railway names.

With the index being confined in a narrow range, the rally in precious metals has been the big talking point, particularly Silver. Prices in the futures market surged as much as 11% on the Comex on Friday night and even neared $80 an ounce.

Shares of Hindustan Zinc, the only listed silver play in the country, have already risen 31% in the last one month. Same has been the case with Hindustan Copper, whose shares have rallied to levels last seen in 2010 with Copper prices continuing to make new peaks.

The big talking point on Monday though, could be Coforge, with the stock having already corrected over 11% in the last three sessions and with the company announcing a big bang acquisition after market closing hours. Brokerages have largely maintained their positive stance on the stock, but their commentary veers on the side of caution.

An index to watch on Monday will be the Nifty Bank, with the private financials not contributing to its upside. 59,500 continues to remain a hurdle, but the index is on the verge of breaking below the 59,000 mark on the downside, a level that it has managed to close below on only three instances in the month of December. The index is also on a three-day losing streak, underperforming the market in the process.

Om Mehra of SAMCO Securities said that the first near-term support for the Nifty Bank is placed at the 38.2% Fibonacci retracement level, which is at 58,980, precariously close to Friday's closing level. Below that, the 50% retracement level of 58,630 will be the next important level to watch. The immediate trend decider level of 58,400, coincides with the 61.8% retracement levels. He expects the index to remain rangebound in the near-term.