Trade Setup For Oct. 16: Nifty Forms Dark Cloud Cover, Support Seen At 25,000-25,250

Nifty formed a 'bearish engulfing candle' on Tuesday, indicating a potential trend reversal. This means that sellers are now in control. The short-term market outlook remains non-directional, analysts said, with range-bound activity expected to persist in the near future.

Analysts advise caution, since a breach of key support levels could lead to further downside in the near future.

"Fresh buying should only be considered if the index provides a strong closing above the 25,250 level, confirming a potential recovery. On the downside, immediate support is placed at 25,000, followed by 24,900. A break below these levels could intensify selling pressure, dragging the index towards the 24,700–24,500 range," said Hardik Matalia, derivative analyst at Choice Equity Broking Pvt.

Traders should closely monitor critical levels, with 25,250 acting as a major resistance, according to Matalai, potentially capping any short-term recovery attempts.

"Traders seem to be waiting for a catalyst, and only a breakout from this range might revive momentum. Until then, a strategy of buying on dips and booking profits at higher levels remains prudent. Focus should also remain on stock-specific trades, as they offer better opportunities," said Rajesh Bhosale, technical analyst of equity at Angel One.

Analysts believe that 25,000 and 81,500 would be the immediate support zones for Nifty and Sensex, respectively, for day traders.

"Above the same, we could see one quick pullback rally till 25,200-25,250 and 82,300-82,500. On the flip side, below 25,000 and 81,500, the market (Nifty and Sensex) could retest the level of 24920-24900 and 81,000-80,700," said Shrikant Chouhan, head of equity research at Kotak Securities.