Market Overview

Indian equity markets head into the December 29 trading session with a cautious undertone, following signs of short-term weakness in both benchmark indices. After a strong rally earlier in the month, markets are now showing symptoms of fatigue as profit booking increases near higher levels.

According to market analyst Dhwani Patel, the current setup reflects a pause in momentum rather than a full-fledged reversal, but traders must remain alert as downside risks have started to increase. Technical indicators are cooling, options data shows rising Call writing at resistance levels, and volatility remains extremely low—often a precursor to sharper directional moves.

With the year nearing its end and liquidity thinning, traders should shift focus from aggressive positioning to risk-controlled, level-based trading.

Nifty 50: Technical Outlook

Current Level: 26,042

The Nifty 50 formed a bearish candle with minor upper and lower shadows on the daily chart, reflecting uncertainty and selling pressure at higher levels. Notably, this session marked the first lower-high–lower-low formation in the last five sessions, suggesting that momentum has slowed.

Key Technical Observations

• Index faced rejection near recent highs
• Short-term moving averages and Bollinger Band midline provided temporary support
• First sign of short-term trend exhaustion
• Price still holding above critical medium-term supports

Momentum Indicators

• RSI: Slipped to 52.97, moving closer to the reference line
• Stochastic RSI: Gave a bearish crossover, indicating weakening momentum
• MACD: Still marginally above the reference line, but histogram strength has reduced

As per Dhwani Patel, these signals collectively point toward cautious sentiment with increasing downside risk if key support zones fail to hold.

Key Levels for Nifty 50

Resistance (Pivot-Based):

• 26,117
• 26,149
• 26,201

Support (Pivot-Based):

• 26,013
• 25,981
• 25,929

Holding above 25,981–26,013 is crucial to avoid further downside. A decisive break below this zone could invite deeper correction.

Bank Nifty: Technical Outlook

Current Level: 59,011

Bank Nifty also reflected weakness, forming a bearish candle with long upper and lower shadows, highlighting volatility and indecision. Unlike earlier sessions, the index failed to sustain above short-term moving averages.

Key Technical Observations

• Sustained below short-term moving averages
• Trading below the Bollinger Band midline
• Failure to reclaim higher levels
• Relative underperformance compared to Nifty

Momentum Indicators

• RSI: Dropped sharply to 50.06, hovering near neutral
• Stochastic RSI: Turned bearish
• MACD: Remains below the reference line with weakening histogram

According to Dhwani Patel, Bank Nifty’s structure reflects a weak short-term trend, with upside likely to remain capped unless strong buying emerges near support.

Key Levels for Bank Nifty

Resistance (Pivot-Based):

• 59,136
• 59,191
• 59,280

Support (Pivot-Based):

• 58,957
• 58,902
• 58,813

Fibonacci Resistance:

• 59,455
• 60,875

Fibonacci Support:

• 58,636
• 58,287

Sustaining below 59,136 keeps the bias weak for the index.

Nifty Options Data: Monthly Expiry Analysis

Call Options Activity

The 26,200 strike holds the maximum Call open interest at 1.91 crore contracts, acting as a strong resistance. Other significant Call OI levels include:

• 26,100 strike – 1.54 crore
• 26,300 strike – 1.28 crore

Fresh Call Writing Observed At:

• 26,100 strike: +1.1 crore contracts
• 26,050 strike: +71.9 lakh contracts
• 26,200 strike: +57.38 lakh contracts

Call Unwinding Seen At:

• 26,650 strike: −7.95 lakh contracts
• 26,600 strike: −6.19 lakh contracts
• 26,400 strike: −2.72 lakh contracts

This heavy Call writing near current levels highlights strong resistance overhead.

Nifty Put Options Data

Put Options Activity

The 26,000 strike holds the maximum Put open interest at 1.49 crore contracts, acting as a crucial support zone. Other notable levels:

• 25,800 strike – 76.43 lakh
• 25,900 strike – 71.62 lakh

Put Writing Observed At:

• 26,050 strike: +30.45 lakh contracts
• 25,950 strike: +23.23 lakh contracts
• 25,900 strike: +14.51 lakh contracts

Put Unwinding Seen At:

• 26,200 strike: −35.82 lakh contracts
• 26,150 strike: −23.45 lakh contracts
• 26,100 strike: −11.65 lakh contracts

As noted by Dhwani Patel, the combination of Put unwinding at higher levels and Call writing near resistance suggests weakening bullish confidence.

Bank Nifty Options Data: Monthly Expiry

Call Options Activity

The 59,500 strike holds the maximum Call open interest at 20.99 lakh contracts, followed closely by:

• 60,000 strike – 20.86 lakh
• 59,000 strike – 12.89 lakh

Fresh Call Writing Seen At:

• 59,000 strike: +4.12 lakh contracts
• 59,200 strike: +3.94 lakh contracts
• 59,100 strike: +3.63 lakh contracts

Call Unwinding Seen At:

• 59,500 strike: −3.11 lakh contracts
• 60,300 strike: −1.09 lakh contracts
• 60,200 strike: −1.03 lakh contracts

This highlights persistent selling pressure near resistance.

Bank Nifty Put Options Data

Put Options Activity

The 59,000 strike holds the maximum Put open interest at 14 lakh contracts, acting as immediate support. This is followed by:

• 58,500 strike – 10.82 lakh
• 59,500 strike – 8.85 lakh

Put Writing Observed At:

• 58,900 strike: +2.52 lakh contracts
• 58,600 strike: +1.56 lakh contracts
• 59,100 strike: +1.24 lakh contracts

Put Unwinding Seen At:

• 59,300 strike: −2.34 lakh contracts
• 59,500 strike: −2.29 lakh contracts
• 59,200 strike: −1.05 lakh contracts

Options data points toward range-bound to weak sentiment.

Put-Call Ratio (PCR)

The Nifty Put-Call Ratio dropped sharply to 0.76, from 0.98 in the previous session.

Interpretation

• Falling PCR reflects increasing bearish sentiment
• Call selling is dominating Put selling
• Indicates caution and reduced risk appetite

As per Dhwani Patel, PCR moving toward 0.7 often aligns with market consolidation or corrective phases.

India VIX

India VIX closed at a fresh record low of 9.15, down 0.44 percent.

What Low VIX Signals

• Market complacency
• Low perceived risk
• Higher probability of sudden sharp moves

Low volatility combined with weakening momentum calls for extra caution.

Trading Strategy for December 29, 2025 (Dhwani Patel’s View)

According to Dhwani Patel, traders should adopt a defensive approach:

• Avoid aggressive long positions near resistance
• Focus on support-based buying only if levels hold
• Consider partial profit booking on rallies
• Avoid over-leveraging in low-volatility conditions
• Wait for directional confirmation before fresh trades

Conclusion

The trade setup for December 29, 2025, reflects a cautious and weakening short-term outlook, especially after the emergence of lower-high formations in Nifty and sustained weakness in Bank Nifty. While long-term trends remain intact, the near-term structure suggests increased downside risk unless key supports hold.

As emphasised by Dhwani Patel, discipline and patience will be critical in navigating year-end market conditions.

Disclosure & Disclaimer

Dhwani Patel (SEBI Registration No: INH200008608) is a SEBI-registered Research Analyst.
All views are for educational purposes only. This is not investment advice. Please consult your financial advisor before trading.

Frequently Asked Questions (FAQs)

Q1. Is the market bearish on December 29, 2025?
The market shows cautious to weak signals in the short term, though no major breakdown has occurred yet.

Q2. What is the key Nifty support level?
The 26,000 zone remains a critical support for Nifty.

Q3. Why is falling PCR important?
A falling PCR indicates increasing bearish sentiment due to higher Call selling.

Q4. Does low India VIX support bulls?
Low VIX supports stability but also increases the risk of sudden sharp moves.

Q5. Should traders trade aggressively today?
No, traders should remain selective and risk-conscious.