Introduction: Markets Enter the Final Trading Day of 2025

The last trading session of the calendar year often carries symbolic as well as technical importance. December 31, 2025, arrives at a time when markets are balancing multiple forces — year-end book closing, profit booking, positioning for the new year, and reduced liquidity. These factors often make price action slow, indecisive, and heavily level-dependent.

According to market analyst Dhwani Patel, the final session of the year should never be traded with aggression. Instead, it demands clarity, discipline, and respect for technical confirmation. Markets at such junctures often send early signals about sentiment for the opening days of January.

This detailed trade setup for December 31, 2025, focuses on:

• Nifty and Bank Nifty technical structure
• Support and resistance levels
• Options market positioning
• Volatility outlook
• Practical trading strategy and risk control

Broader Market Overview: Indices Search for Direction

The broader market environment continues to reflect short-term weakness with signs of stabilisation. While the recent decline has slowed, strong bullish conviction is still missing. Instead of sharp directional moves, markets are responding to key levels and derivatives activity.

As Dhwani Patel explains, “When markets stop trending and start reacting, levels matter more than opinions.”

Nifty 50 Technical Outlook for December 31, 2025

The Nifty 50 closed near 25,939, forming a Doji candlestick pattern on the daily chart. A Doji at support typically signals indecision, highlighting a tug-of-war between buyers and sellers after a recent decline.

Technical Structure Analysis

• The index remains below short-term moving averages, indicating that immediate momentum is still weak.
• It is also trading below the midline of the Bollinger Bands, which often acts as a dividing line between bullish and bearish zones.
• The RSI continues to stay below the 50 mark, reflecting lack of bullish strength.
• Price action suggests that selling pressure is easing, but confirmation of reversal is still missing.

The Doji formation near support implies that sellers are losing dominance, but buyers are yet to assert full control.

Nifty 50 Key Levels to Watch

On the upside, immediate resistance is seen near 25,970, followed by 25,990–26,030. These zones coincide with previous breakdown levels and short-term supply areas. Any sustained move above these levels will be critical to signal a potential short-term recovery.

On the downside, support lies near 25,890, with additional cushions near 25,870 and 25,830. A breakdown below these zones may reopen the door for deeper downside, while holding above them could result in sideways-to-positive movement.

As per Dhwani Patel, “A Doji demands confirmation — traders should wait, not predict.”

Bank Nifty Technical Outlook for December 31, 2025

Bank Nifty closed around 59,171, displaying relatively better strength compared to the Nifty. The index formed a bullish candle resembling an engulfing-type pattern, signalling improving sentiment after the recent decline.

Technical Structure Analysis

• The banking index found support at an upward-sloping trendline, indicating demand at lower levels.
• It managed to reclaim short-term moving averages, a positive sign for near-term stability.
• However, it failed to close decisively above the midline of the Bollinger Bands, suggesting that momentum is improving but not yet strong.
• The RSI moved up to around 53, nearing a bullish crossover.
• The Stochastic RSI climbed above its reference line, showing increasing buying interest.
• The MACD remains below the reference line, though histogram weakness is gradually fading.

Overall, the setup indicates emerging strength with caution, rather than a confirmed bullish reversal.

Bank Nifty Key Levels to Watch

Immediate resistance for Bank Nifty lies near 59,265, followed by 59,390 and 59,595. A close above these levels would be required for sustained upside momentum.

On the downside, supports are placed near 58,855, followed by 58,730 and 58,525. Fibonacci supports near 58,635 and 58,287 remain crucial to protect the broader structure.

According to Dhwani Patel, “Bank Nifty often gives early clues; its ability to hold trendline support will shape sentiment.”

Nifty Options Data: Weekly Positioning Signals

Call Side Analysis

The highest Call open interest is concentrated near the 26,000 strike, making it a strong resistance zone. Additional Call concentration is seen at 26,300 and 26,200, reinforcing overhead supply.

Fresh Call writing at 26,000 suggests that traders are actively betting against immediate upside beyond this level. The absence of meaningful Call unwinding indicates continued resistance-based selling.

Put Side Analysis

On the Put side, significant open interest is also placed near 26,000, creating a critical pivot zone for Nifty. Additional support is visible at 25,900 and 25,600.

Fresh Put writing near 25,900 suggests that traders are willing to defend lower levels, supporting the possibility of near-term stabilisation. Limited Put unwinding at higher strikes reflects reduced bearish aggression.

This balanced positioning suggests a range-bound bias with volatility spikes near key levels.

Bank Nifty Options Data: Monthly Expiry Perspective

Call Side Positioning

Maximum Call open interest is seen near 59,500, followed by 60,000 and 61,000, indicating heavy resistance overhead. Fresh Call writing at higher strikes reflects cautious sentiment among traders expecting limited upside.

The absence of significant Call unwinding suggests that sellers remain confident about resistance zones holding.

Put Side Positioning

On the Put side, 59,500 also holds strong open interest, creating a narrow zone of activity. Additional Put support is visible near 59,000 and 58,000.

Fresh Put writing at 59,000 indicates short-term confidence in downside protection, while limited Put unwinding suggests that traders are not aggressively positioning for a breakdown.

Put-Call Ratio (PCR): Sentiment Improves Slightly

The Nifty Put-Call Ratio rose to 0.92, up from 0.68 in the previous session. This increase reflects improving sentiment, as traders shift from aggressive Call selling toward more balanced positioning.

As Dhwani Patel explains, “A rising PCR after a decline often signals stabilisation, not instant bullishness.”

PCR below 1 still indicates caution, but the sharp recovery reduces immediate bearish pressure.

India VIX: Volatility Remains Contained

India VIX closed around 9.68, marginally lower on the day. Despite attempts to rise, volatility remains below all key moving averages, suggesting comfort among market participants.

Low volatility generally favours stability but can also mask sudden directional moves, especially during low-liquidity sessions like year-end trading.

Trading Strategy for December 31, 2025 – Dhwani Patel’s View

For the final session of the year, Dhwani Patel advises a measured and confirmation-based approach:

• Avoid aggressive directional bets
• Trade only after confirmation near support or resistance
• Focus on intraday range trades, not positional trades
• Reduce position size due to thin liquidity
• Protect profits quickly and avoid overnight exposure

Year-end sessions are more about capital protection than performance.

Key Risks to Monitor

• Sudden volatility spikes due to low participation
• Option-driven moves near key strikes
• False breakouts around resistance levels
• Emotional trading influenced by year-end bias

Conclusion: End the Year with Discipline, Not Risk

The trade setup for December 31, 2025, reflects a market searching for direction. While Nifty remains cautious and indecisive near support, Bank Nifty shows early signs of stabilisation. Options data suggests range-bound movement, while volatility remains low.

As emphasised by Dhwani Patel, the final trading day is best used to observe, assess, and protect capital, rather than force trades. How markets behave around these levels may offer valuable clues for the first trading sessions of 2026.

Frequently Asked Questions (FAQs)

Q1. Is December 31 a good day for trading?
It is suitable for light, intraday trading, but not for aggressive positions.

Q2. Is the market trend bearish or bullish?
The market shows cautious consolidation, not a confirmed trend.

Q3. Should swing traders hold positions overnight?
It is generally safer to reduce overnight exposure during year-end.

Q4. What does the Doji pattern indicate?
Indecision — traders should wait for confirmation.

Q5. What is the safest strategy for today?
Level-based trading with tight risk control, as suggested by Dhwani Patel.

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.