Trade Setup for November 25: Nifty remains in a range but broader market pain may dampen sentiments

The Indian equity market remained weak for a second straight session as Nifty slipped below the key 26,000 mark. The index ended 108 points lower, signalling profit booking and a brief pause after the recent rally rather than a clear trend reversal.

While the medium term structure is still positive, short term sentiment has turned fragile with rising volatility and late session selling.

Markets opened on a strong note, with Nifty gaining about 50 points on firm global cues. However, selling pressure intensified through the day.

The index reversed sharply, falling nearly 230 points from the intraday high of 26,142 and closing near the day's low at 25,959.

Weakness across the broader market also weighed on sentiment ahead of the monthly expiry. IT and banking stocks held up in the first half, but the final hour saw a broad based decline.

Despite the drag, a few heavyweights managed to stay resilient, with SBI Life, Tech Mahindra and Eicher Motors closing higher. BEL, JSW Steel and Max Healthcare were among the major losers.

Sectoral performance was largely negative. Except for the Nifty IT index, all other sectors ended in the red. Realty, metals and consumer durables led the fall.

The broader market mirrored this pressure as the Nifty Midcap 100 fell 0.32% and the Smallcap 100 dropped 0.85%. The Smallcap index extended its losing streak to a fifth session and closed below its 200 day exponential moving average.

Nifty's recent attempt to break past its September 2024 peak has been hindered by the delay in the US-India trade agreement. Monday marked the second day of profit booking after the index's strong run, where it had gained in eight out of nine sessions.

With no major domestic triggers until the GDP data on Friday, traders are likely to stay cautious. Progress on the India-US trade talks and the pattern of foreign flows will influence near term direction, said Siddhartha Khemka of Motilal Oswal.

Nilesh Jain of Centrum Broking said a fall below 25,850 could take Nifty towards 25,700, while a move above 26,180 may lift sentiment and open the way for 26,300. With the November series monthly F&O expiry approaching, he expects heightened volatility within the 25,800 to 26,200 range.

According to Nagaraj Shetti of HDFC Securities, the short term trend has now turned down. He sees downside potential to 25,700 in the coming sessions, while the 26,200 to 26,300 zone is likely to act as a firm resistance.

Bank Nifty showed strength in early trade but failed to sustain near its previous high. A sharp late slide wiped out most gains, and the index closed slightly lower below 58,900.

Sudeep Shah of SBI Securities said the 20 day EMA around 58,400 to 58,300 is a crucial support zone. A break below this could extend the decline to 57,700. On the upside, the 59,200 to 59,300 band remains the key barrier that needs to be crossed for bullish momentum to resume.