Trade setup for January 16: The market still lacks support for a strong bullish revival

Nifty extended gains but remains range-bound with a bearish bias unless it closes above key averages. Weak momentum, cautious derivatives data, and rising short build-ups signal pressure, while traders should watch the 23,050–23,350 range closely.

The Nifty 50 extended its gains for a second straight session on January 15, rising 0.2 percent amid choppy trade. Despite the uptick, experts believe the broader sentiment continues to favour bears unless the index decisively closes above all key moving averages.

In the near term, the Nifty 50 is expected to trade within the 23,050–23,350 range, defined by Monday’s low and high. A decisive break below the lower end of this band could open the door for a decline toward 22,800. On the upside, a move above 23,350 may push the index toward the 10-day EMA at 23,460, followed by the 200-day EMA at 23,680.

On the daily chart, the Nifty formed a small bearish candle with minor shadows, signalling indecision and range-bound activity. The index is trading near the lower Bollinger Band, while momentum indicators remain weak, with the RSI at 36 and the MACD below the zero line.

The Bank Nifty also ended marginally lower, forming a High Wave-like candlestick pattern that reflects uncertainty. Although the index continues to make higher highs and higher lows, it remains below key moving averages, keeping the broader trend under pressure.

In the derivatives space, options data shows strong resistance for the Nifty around the 23,300 strike, which holds the highest Call open interest, while the 23,200 strike has emerged as a key support on the Put side. For Bank Nifty, the 50,000 Call strike and 48,000 Put strike remain crucial resistance and support levels, respectively.

Market volatility eased further, with India VIX slipping to 15.26, though the reading still does not support a strong bullish revival. The Nifty put-call ratio declined to 0.82 from 0.86, indicating a cautious undertone among traders.

On the stock-specific front, data showed a higher number of short build-ups compared with long build-ups, reinforcing the prevailing cautious-to-bearish bias. Meanwhile, Aditya Birla Fashion & Retail, Kalyan Jewellers, and Manappuram Finance were added to the F&O ban list, while Aarti Industries, Angel One, Bandhan Bank, Hindustan Copper, L&T Finance, and RBL Bank continue to remain under the ban.

Overall, traders are advised to stay cautious and watch key support and resistance levels closely, as the market remains range-bound with a negative bias.