Trade Setup for October 17: Nifty may head towards 26,000 as bulls stay in control for second straight session

The trading session on Thursday began on a strong note, with the Nifty opening with a healthy bullish gap.

Buying momentum remained firm throughout the day as the bulls dominated trade, keeping prices steadily higher without any notable intraday pullback.

The index eventually closed with strong gains of over a percent, ending 261 points higher at 25,585.

This marked the second consecutive session of gains, with the Nifty decisively crossing the psychological hurdle of 25,500, a sign of sustained bullish strength.

After Wednesday’s steady upmove, Thursday’s session witnessed a clear upside breakout. The index opened 71 points higher and surged through the morning and mid-session before a brief consolidation near the 25,600 zone, ultimately finishing close to the day’s highs.

The rally was broad-based, supported by upbeat Q2 results and improving investor sentiment.

The broader markets strengthened, with the Nifty Midcap100 rising 0.5% and the Nifty Smallcap100 gaining 0.2%, indicating widespread participation.

Sectorally, Realty (+2%) and FMCG (+2%) led the gains, buoyed by better-than-expected numbers from Nestle India. Consumer Durables and Private Banks also advanced on strong corporate earnings and resilient demand trends.

Meanwhile, Auto stocks rose 1.3%, led by festive demand optimism following GST cuts on small cars, two-wheelers, and tractors. The only laggard was IT Hardware (-0.8%), which remained under pressure amid ongoing US-China trade tensions.

Market sentiment also received a boost from supportive macro factors, including falling crude oil prices, positive Asian cues, and growing hopes of a US Federal Reserve rate cut.

Additionally, expectations of a ₹40,000-45,000 crore defence capex push and potential PSU bank mergers further lifted sentiment.

Progress on India-US trade discussions in Washington, with a focus on energy cooperation, added to the optimism.

Experts remain optimistic about the near-term outlook. Siddhartha Khemka of Motilal Oswal expects markets to edge higher as the earnings season progresses and global trade signals improve.

Nagaraj Shetti of HDFC Securities said that the underlying trend remains positive, with a sustained move above 25,600-25,700 likely to open the door for the next upside targets at 26,000-26,200.

Technically, the Nifty appears poised to retest its calendar-year high around 25,700, with potential to move towards 26,000, and eventually its all-time high near 26,300.

Rajesh Bhosale of Angel One advised traders to maintain a positive bias and continue a buy-on-dips approach, as momentum clearly favours the bulls.

He identified the breakout zone around 25,450 as immediate support, followed by the bullish gap area near 25,350.

Nilesh Jain of Centrum Broking added that the Nifty has broken above a major falling trendline connecting key tops since the previous record high of 26,277, indicating potential for further upside. Fresh long positions in derivatives are reinforcing the bullish sentiment, with momentum indicators still showing buy signals on daily and weekly charts.

Jain expects Nifty to head towards 25,800-26,000 in the short term, with support now shifting higher to 25,420.

Rupak De of LKP Securities said the bulls remained firmly in control as the Nifty surpassed and closed above the crucial 25,500 resistance. On the technical front, the index has given a swing high breakout, supported by a rising RSI and a bullish crossover. He sees the short-term trend remaining positive, with potential upside towards 25,750-25,800, and support placed at 25,500 on the downside.