Trade Setup for December 31: Nifty bulls aim to end 2025 on a high as index delivers another year of positive returns

Market movement remained rangebound on Tuesday, with the Nifty managing to hold above the crucial 25,900 level despite extending losses for a fourth straight session. The benchmark ended marginally lower by 3 points at 25,938.

Expiry day trading was marked by heightened volatility. Bears dominated the first half of the session, but a late pullback by bulls helped the index recover most of its losses by the close.

After opening on a positive note, the Nifty slipped into negative territory for most of the day, with intraday recovery attempts during the early and mid-session failing to sustain. The index eventually settled close to its opening levels on the December F&O expiry.

Nagaraj Shetti of HDFC Securities said bulls appear to be attempting a comeback after recent weakness. He sees immediate support in the 25,850-25,800 zone, while the next key resistance lies at 26,100.

LKP Securities' Rupak De flagged some emerging negative technical signals that could weigh on sentiment in the coming days. He said that immediate support is placed between 25,850 and 25,870, and a decisive break below this zone could intensify bearish momentum. On the upside, resistance is seen near the 26,000 mark.

Hrishikesh Yedve, AVP technical and derivative research at Asit C Mehta Investment Intermediates, said the index faces a major hurdle in the 26,250-26,325 zone.

He added that immediate support is placed near 25,835, which coincides with the 50-DEMA. If the index manages to defend this level, it could once again test the 26,200-26,300 range. Yedve advised short-term traders to adopt a buy-on-dips strategy as long as Nifty holds above 25,835.

Meanwhile, Nandish Shah of HDFC Securities said that despite the marginal decline, the Nifty's close above its 50-DEMA at 25,837 keeps the short-term bullish structure intact. He cautioned that a decisive move below this level could signal weakness and a possible shift in the ongoing uptrend.