Trade Setup for December 15: Nifty bulls look to push index higher after reclaiming 26,000

The bulls mounted a strong comeback as the Nifty extended gains for a second straight session on Friday, ending above the 26,000 mark.

The index opened with a 70 point gap-up amid strong global cues but saw profit booking in the first hour of trade. After 10:30 am, however, buying interest returned sharply, with the Nifty rebounding nearly 120 points from the day's low of 25,938 to settle near the day's high. The benchmark rose 148 points to close at 26,047.

Despite the two-day rebound, the Nifty ended the week with a loss of 0.53%.

Among index heavyweights, Tata Steel, Hindalco and Eternal led the gainers, while Hindustan Unilever, Max Healthcare and Sun Pharma underperformed amid selling pressure.

Market breadth remained strong, with most sectoral indices closing higher. Only the Nifty FMCG and Media indices ended in the red, while Metals, Realty and Consumer Durables posted the strongest gains.

Broader markets also mirrored the upbeat trend for a second day. The Nifty Midcap 100 rose 1.18%, while the Nifty Smallcap 100 gained 0.95%.

In currency markets, the rupee weakened for a third consecutive session, slipping 5 paise to a fresh record low of 90.42 against the dollar. The decline was driven by strong importer demand amid elevated global precious metal prices.

On the macro front, ongoing negotiations between India and the US, along with a recent phone call between the two heads of state, suggest progress on resolving pending issues and have raised optimism around a potential trade deal.

Siddhartha Khemka of Motilal Oswal expects markets to remain range-bound with intermittent volatility in the broader indices, adding that any formal breakthrough on the India-US agreement could trigger a meaningful upside.

Nagaraj Shetti of HDFC Securities said the underlying trend for the Nifty remains positive, with upside levels seen around 26,300 to 26,400, while immediate support is placed at 25,900.

Earlier last week, the Nifty found support near its 50-day moving average at 25,720 and rebounded sharply from that level, which is expected to remain a key support zone.

The index has also moved above its short-term 21-day moving average at 26,020. If the Nifty manages to sustain above 26,000, a short-covering move towards 26,200 to 26,250 is possible in the coming week, according to Nilesh Jain of Centrum Broking.

HDFC Securities' Nandish Shah said the short-term trend has turned positive as the Nifty closed decisively above its key short-term moving averages. On the upside, 26,202 remains an important hurdle, while the key support has shifted higher to 25,900.

From a technical perspective, the previous swing high zone of 26,150 to 26,200 is likely to act as an immediate resistance. A sustained move above 26,200 could open the door for a further pullback towards 26,350, followed by 26,500. On the downside, the 25,900 to 25,850 zone is expected to provide strong support, said Sudeep Shah of SBI Securities.