Trade Setup for Jan 28: Nifty holds 25,000; Break below 24,900 may trigger fresh sell-off

The Nifty 50 rebounded sharply from intraday lows to close above 25,000, but analysts warn that multiple resistance levels and pre-Budget caution could keep markets volatile, with traders watching 25,400–25,500 as the key breakout zone.

Indian equities staged a late recovery on Tuesday, with the Nifty 50 managing to hold the crucial 25,000 level despite sharp intraday swings, but market experts caution that significant hurdles remain as traders position themselves ahead of the Union Budget.

The monthly expiry session on the NSE turned highly volatile, with the benchmark index fluctuating nearly 300 points through the day. After a weak start, the Nifty slipped 131 points in early trade, hitting an intraday low of 24,932 within the first 15 minutes. Persistent caution dominated most of the session, as traders avoided aggressive positions amid expiry pressures and looming macro triggers.

However, sentiment shifted decisively in the final hour. Strong buying interest lifted the index nearly 250 points from the day’s lows, pushing it to an intraday high of 25,246. The Nifty eventually closed 126 points higher at 25,175, ending near the session’s peak and signaling resilience at lower levels.

Stock-specific moves shaped the day’s action. Adani Enterprises, Axis Bank, and JSW Steel emerged as key gainers within the Nifty pack. On the flip side, Mahindra & Mahindra, Asian Paints, and Kotak Mahindra Bank weighed on the index and finished among the top losers.

Sectoral trends were mixed. Metals, PSU Banks, and IT stocks led the rebound, benefiting from renewed risk appetite and value buying. Meanwhile, Media, Auto, and FMCG counters underperformed, reflecting selective profit-booking and defensive positioning.

Broader markets also participated in the recovery. The Nifty Midcap 100 rose 0.59%, while the Smallcap 100 added 0.41%, indicating improving sentiment beyond frontline stocks.

In currency markets, the rupee strengthened by 22 paise to settle at 91.92 per dollar, supported by a softer greenback and optimism linked to recent trade developments. Still, gains remained capped due to month-end dollar demand and cautious foreign flows ahead of the February 1 Union Budget.

Market strategists expect range-bound movement in the near term. Siddhartha Khemka of Motilal Oswal believes global cues and geopolitical developments will guide sentiment, while domestic stock-specific action will continue to be driven by the ongoing Q3 earnings season.

From a technical perspective, the Nifty’s ability to defend the 25,000 level and reclaim its 200-day moving average on a closing basis is encouraging. Yet, analysts stress that confirmation through sustained follow-through buying is essential.

Nilesh Jain of Centrum Broking sees the index oscillating within 25,000–25,400 in the short term. Nagaraj Shetti of HDFC Securities notes that the trend appears to have reversed upward from 24,900 support, with the next resistance near 25,500 and immediate support around 25,150.

Rupak De of LKP Securities, however, advises caution. He maintains that unless the Nifty decisively breaks above 25,500, a sell-on-rise approach may continue to be relevant. A breach below 24,900 could revive selling pressure.

With the Union Budget approaching, traders are likely to remain nimble, balancing technical signals with policy expectations.