Trade Setup for December 18: A slip below key levels may drag Nifty back to 25,400

The Nifty extended its losing streak for a third straight session, slipping 41 points to close at 25,818. The index opened on a positive note and attempted to move higher in early trade, but failed to sustain gains and drifted into weakness amid volatility in a narrow range.

Over the past three sessions, the Nifty has been forming lower highs and lower lows on the daily chart, indicating that bears continue to dominate the short-term trend.

The index remained below the key 25,850 mark, weighed down by selling pressure in financial heavyweights along with stocks such as M&M and L&T.

Among Nifty constituents, Shriram Finance, SBI, and Hindalco emerged as the top gainers, while Max Healthcare, Apollo Hospitals, and Trent ended as the biggest losers of the session.

Sectorally, Nifty PSU Bank, IT, and Metal indices showed strength, while Media, Consumer Durables, and Realty stocks led the declines.

Broader markets mirrored the benchmark’s weakness, with the Nifty Midcap 100 and Nifty Smallcap 100 indices falling 0.50% and 0.70%, respectively.

Meanwhile, the Indian rupee snapped a five-day losing streak, appreciating sharply by 65 paise against the US dollar, with the rebound widely attributed to suspected intervention by the central bank.

On the technical front, Nandish Shah of HDFC Securities said the Nifty is trading close to its 50-day exponential moving average, currently placed at 25,765. A decisive break below this level could trigger further selling and deepen the ongoing correction.

Rupak De of LKP Securities said a sustained move below 25,700 could open the door for a correction towards the 25,500-25,400 zone. On the upside, the 25,950-26,000 range is expected to act as a key resistance area.

Nagaraj Shetti of HDFC Securities said the underlying trend remains weak, with the Nifty likely to find near-term support around 25,700-25,650. He added that any rebound from these levels could face strong resistance near the 25,950-26,000 zone.

According to Sudeep Shah of SBI Securities, 58,600-58,500 will act as important support for the Bank Nifty index. This zone which acted as a resistance earlier, can now act as a support.

Shah said that any sustainable move below the 58,500 will lead to further correction upto the 58,000 level in the short term. While on the upside, the zone of 59,200-59,300 will act as an important hurdle for the index.

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