Market Overview: Strong Breakout Signals Bullish Continuation

Indian equity markets entered the first full trading week of January 2026 on a strong footing. Both benchmark indices — Nifty 50 and Bank Nifty — delivered decisive breakout moves backed by above-average volumes, reinforcing bullish sentiment across the broader market.

According to Dhwani Patel, the current structure suggests that the market is transitioning from a consolidation phase into a trend expansion phase, where momentum-based trading strategies may outperform reactive approaches.

The combination of:

• Falling resistance trendline breakouts
• Strong momentum indicators
• Aggressive Put writing
• Elevated Put-Call Ratio
• Low yet stable volatility

creates a supportive backdrop for bulls, though traders must remain disciplined with risk management at higher levels.

Nifty 50 Technical Outlook (Close: 26,329)

📌 Key Pivot Levels

Resistance Zones

• 26,347
• 26,399
• 26,484

Support Zones

• 26,178
• 26,125
• 26,041

Technical Structure & Price Action

The Nifty 50 formed a long bullish candle on the daily chart after successfully breaking above a falling resistance trendline. Importantly, this breakout was supported by above-average trading volumes, which adds credibility to the move.

The index also managed to:

• Close above the upper Bollinger Band
• Sustain well above all key moving averages
• Maintain a clear higher high–higher low price structure

As noted by Dhwani Patel, such price behavior often signals trend acceleration rather than exhaustion, especially when momentum indicators confirm the move.

Momentum Indicators Snapshot

• RSI: 62.39 (strong bullish territory)
• Stochastic RSI: Bullish crossover intact
• MACD: Positive crossover with strengthening histogram

These indicators collectively point toward continued bullish momentum, with limited downside risk unless the index slips decisively below the immediate support zone of 26,178.

Bank Nifty Technical Outlook (Close: 60,151)

📌 Key Pivot Levels

Resistance Zones

• 60,209
• 60,319
• 60,497

Support Zones

• 59,853
• 59,743
• 59,565

Fibonacci Resistance

• 60,496
• 60,980

Fibonacci Support

• 59,852
• 59,634

Price Action & Trend Strength

Bank Nifty delivered an even stronger performance, registering a decisive breakout above the 59,800 resistance, followed by a fresh all-time high near 60,204.

The index:

• Formed a long green candle
• Closed well above the upper Bollinger Band
• Showed bullish dominance across all timeframes

According to Dhwani Patel, banking stocks are currently acting as the primary market leaders, and as long as Bank Nifty holds above 59,800, any dip is likely to be viewed as a buying opportunity.

Momentum Indicators

• RSI: 67.55 (strong bullish zone)
• MACD: Fresh bullish crossover
• Histogram: Expanding above zero line

This configuration suggests sustained strength, though intraday traders should be cautious of short-term pullbacks after sharp rallies.

Nifty Options Data Analysis (Weekly Expiry)

📍 Call Options – Resistance Insight

• Highest Call OI: 27,000 strike (1.2 crore contracts)
• Next resistance levels: 26,500 & 26,600

Heavy Call writing at 26,500 suggests that traders expect resistance near higher zones, but aggressive Call unwinding at 26,200 indicates shorts are getting covered as price moves up.

Put Options – Support Confirmation

• Highest Put OI: 26,000 strike (1.76 crore contracts)
• Aggressive Put writing at 26,300

This confirms that market participants are confident in the strength above 26,000, making it a crucial short-term support zone.

Bank Nifty Options Data (Monthly Expiry)

📍 Call Side

• Maximum Call OI at 59,500
• Rising Call writing at 60,300, 61,000

Despite overhead Call presence, continued price strength indicates short covering rather than fresh resistance.

📍 Put Side

• Maximum Put OI at 59,500
• Aggressive Put writing at 60,000

This suggests strong bullish conviction, with traders betting on higher levels in the near term.

Put–Call Ratio (PCR)

• Current PCR: 1.46
• Previous: 1.13

This is the highest PCR reading since September 2024, indicating:

• Heavy Put selling
• Strong bullish bias
• Elevated confidence among traders

According to Dhwani Patel, while a high PCR supports bullish sentiment, traders should remain alert for short-term consolidations after extended rallies.

🌡️ India VIX – Volatility Check

• VIX: 9.45
• Up 2.89%, but still near historical lows

Despite the mild uptick, volatility remains comfortably low, which continues to favor positional and swing traders rather than panic-driven moves.

Trading Strategy for January 5, 2026

🔹 For Nifty Traders

• Bullish above: 26,178
• Buy on dips near support zones
• Trail stops aggressively due to extended move

🔹 For Bank Nifty Traders

• Bullish above: 59,800
• Preferred strategy: buy dips rather than chase
• Watch for consolidation between 60,000–60,300

As highlighted by Dhwani Patel, the broader market structure remains constructive, but disciplined execution is critical at elevated levels.

⚠️ Risk Factors to Monitor

• Sharp spike in VIX
• Sudden Call writing at lower strikes
• Failure to hold breakout levels
• Global cues impacting sentiment

📌 Conclusion: Bulls in Control, Discipline is Key

The trade setup for January 5, 2026 reflects a market firmly in bullish territory, supported by strong technical breakouts, favorable options positioning, and low volatility.

According to Dhwani Patel, the key for traders will be to align with the trend, avoid emotional decision-making, and respect support levels as the market enters a potentially high-momentum phase.

FAQs – Trade Setup for January 5, 2026

Q1. Is the market still bullish at current levels?

Yes, as long as Nifty holds above 26,178 and Bank Nifty above 59,800, the trend remains bullish.

Q2. Is it safe to buy after such a strong rally?

Chasing is risky. Prefer buying on dips near support zones.

Q3. What does high PCR indicate?

A high PCR indicates strong bullish sentiment, though it can also lead to short-term consolidation.

Q4. How important is India VIX right now?

Low VIX supports trend continuation and reduces the probability of sharp sell-offs.

Q5. Should positional traders stay invested?

Positional traders can stay invested with trail stops and partial profit booking at resistance levels.

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.