Range-Bound Consolidation as Market Breadth Heals
Nifty500 edges up within its consolidation range as small caps lead weekly gains. Market breadth shows early signs of healing even as most stocks remain below key EMAs.
Indian equity markets concluded the week on a quiet note, characterized by year-end profit booking and light trading volumes. The Nifty500 index closed up by approximately 0.43%, closing at 23,780 on December 26.
Key Indices Performance:
Nifty500 outperformed the frontline indices this week, gaining 0.43% versus 0.29% on Nifty50 and 0.13% on Sensex. Nifty SmallCap250 led the market with a strong 1.26% advance, followed by Nifty MidSmallCap400 and Nifty MidCap150, underscoring relatively stronger momentum in the broader and small-cap space.
Key Drivers This Week
There were no major domestic triggers like policy announcements. With global markets also in holiday mode, external cues were muted, keeping institutional flows also subdued.
Technical Perspective
Nifty 500 trend: Despite the daily consolidation, the primary weekly trend remains bullish.
Consolidation/Sideways Phase: The price action on daily timeframe is consolidating in a horizontal channel (defined by the two grey rectangular zones).
Resistance: The upper zone acts as a supply area where Nifty500 has struggled to break out, forming multiple “HH” peaks that failed to initiate a fresh rally.
Support: The lower zone is a demand area. Note the Lower Low (LL) followed by a Higher Low (HL); this indicates that while the trend was threatened, buyers stepped in at the base of the channel to prevent a breakdown.
The latest high is tagged as HH but is only marginally above the prior peaks and still inside the broader resistance band, so it does not yet confirm a strong breakout.
The price is hovering right around 50EMA, indicating a battle between bulls and bears for short-term control. In previous two weeks, price broke below its 50EMA, but managed to close above it as the week ended. Staying above 50EMA keeps the “Buy on Dips” sentiment alive.
The medium-term trend is currently in a consolidation phase. After reaching a 52-week high near 24,035, Nifty500 has faced some resistance and is moving in a range. For Nifty500, breaking and sustaining above the 24,035-24,100 is crucial for the next leg of the bull run.
The reason we track Nifty500 is because it represents over 90% of the free float market capitalization, making it a comprehensive barometer of market health.
Nifty500’s 10EMA crossed over its 20EMA on 23rd December triggering a ‘Stay’ signal that suggests holding onto existing long positions.
As of December 19, 2025, about 47%, 35% and 31% of stocks are above their 10EMA, 30EMA, and 50EMA respectively. Last week, these readings were 41%, 27% and 25%, indicating improvement in market breadth this week.
The short-term and medium-term structural stability across the board remains weak, with only 30-35% of stocks still trading above their 30EMA and 50EMA, well below 50% mark.
The market breadth readings remain below the midpoint (50% mark), signaling that the majority of stocks are trading below short-to-medium-term trend levels, which is typically a corrective sign for the broader market.
It’s important to note that overbought or oversold signals are most relevant for swing traders, as they reflect short-term momentum shifts.
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Summary
The broader market maintains its sideways consolidation phase, with the Nifty 500 index ending the week with a marginal gain of 0.43% to close near 23,780. Market breadth has shown improvement this week; approximately 31% to 35% of stocks are now trading above their 30EMA and 50EMA, up from just 25% in the previous week. Technically, a crossover of Nifty500’s 10EMA over its 20EMA on December 23 has triggered a 'Stay' signal, encouraging us to hold existing long positions as the index continues to battle for control around its 50EMA. Looking ahead, a decisive break and sustain above the 24,035-24,100 resistance zone remains crucial to confirming the next leg of the bull run.