The Nifty 50 started the week on a positive note, snapping its five-day losing streak with a smart rebound that saw the index gain 0.42% to close at 25,790 points. The recovery came after the index had declined more than 2.5% over the last four sessions of the previous week, providing much-needed relief to market participants.

Technical Pattern Signals Potential Reversal

The index demonstrated strong resilience during the trading session, opening below 25,700 and extending its downtrend to an intraday low of 25,473 before staging a remarkable comeback. The Nifty reclaimed the 100-day EMA and formed a Piercing Line pattern, which is considered a bullish reversal formation. This technical development has raised confidence among bulls, though sustainability remains a key concern.

Momentum Indicators Show Mixed Signals

Despite the positive price action, technical indicators present a cautious outlook. The RSI rebounded to 42.84 but remains well below the reference line, while the MACD continues to maintain a bearish crossover with a weakening histogram. These momentum indicators suggest that the current rebound may face challenges in sustaining higher levels.

"This is a positive indication, and one may expect further upside in the short term. The underlying trend of the Nifty seems to have turned up following the sharp weakness seen last week," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

Critical Resistance at 26,000 Level

Technical analysts identify the psychological 26,000 zone as a crucial hurdle for the index. This level coincides with the 20-day EMA and the midline of the Bollinger Bands, making it a significant resistance point. Weekly options data supports this view, with maximum Call open interest positioned at 26,000.

"We remain watchful, as the Nifty faces resistance in the 26,000–26,100 zone, where selling pressure may re-emerge," noted Rupak De, Senior Technical Analyst at LKP Securities.

Bank Nifty Mirrors Broader Market Recovery

The Bank Nifty followed a similar trajectory, gaining 0.34% to close at 59,450 after touching an intraday low of 58,864. The banking index rallied nearly 600 points from its day's low, ending above the midline of the Bollinger Bands and snapping a three-day losing streak.

Volatility Gauge Signals Caution

The India VIX, which measures expected market volatility, rose 4.05% to close at 11.37, extending its uptrend for the third consecutive session. This increase in volatility suggests continued market uncertainty and provides a cautionary signal for investors despite the day's positive performance.

While the technical rebound offers hope for bulls, the combination of weak momentum indicators, rising volatility, and key resistance levels ahead suggests that market participants should maintain a cautious approach in the near term.

Indian equity markets demonstrated remarkable resilience on January 12, 2026, staging a sharp V-shaped recovery that broke a five-session consecutive sell-off. The Nifty 50 rebounded strongly from crucial support levels, while Bank Nifty formed encouraging technical patterns despite facing resistance at higher levels. Market sentiment received a boost from supportive global cues, particularly renewed optimism around India-U.S. trade talks following remarks by newly appointed U.S. ambassador to New Delhi, Sergio Gor, on continued bilateral engagement with fresh discussions scheduled for January 13.

Nifty 50 Technical Analysis

The Nifty 50 experienced significant volatility during the session, initially coming under selling pressure in early trade and slipping below the 25,500 mark. The index briefly breached its 100-day EMA before marking an intraday low at 25,473, where strong buying interest emerged near this critical demand zone.

The recovery appears largely driven by gradual short covering, indicating the move is corrective in nature rather than a confirmed trend reversal. While momentum indicators remain broadly bearish, the 100-day EMA acted as crucial support and helped initiate the bounce. The index successfully reclaimed levels above the previous close and is now attempting to stabilize around the 25,750-25,800 zone.

Bank Nifty Performance and Patterns

Bank Nifty opened on a flat note near 59,233 but failed to sustain higher levels, coming under selling pressure during the early part of the session. The index traded below its falling trendline for most of the day, maintaining a cautious intraday structure.

Selling pressure initially dragged Bank Nifty towards the 59,000 support zone, where strong buying interest emerged. This led to a sharp intraday rebound, resulting in the formation of a bullish hammer candle on the daily chart. This pattern indicates a clear rejection of lower levels and signals a potential short-term reversal from the bottom of the support zone.

Market Outlook and Key Levels

Despite the recovery, both indices face significant resistance levels that need to be overcome for sustained upward momentum. The recovery in Bank Nifty remained corrective and faced rejection near the 59,700 zone, aligning with the declining trendline resistance.

Bank Nifty Key Levels:

• Immediate Resistance: 59,600, followed by 59,900
• Immediate Support: 59,000, followed by 58,800
• Critical Level: Sustained move above 59,600 needed for bullish continuation

Market Sentiment: Intraday sentiment has turned neutral to mildly positive for Nifty 50, though the broader undertone continues to remain cautious. For Bank Nifty, while downside risk has reduced, a confirmed trend reversal is yet to be established. As long as the index trades below the falling trendline, the broader bias remains cautious, with markets likely to remain range-bound while awaiting further confirmation.