Nifty Trade Setup for Dec 18: Is 25,400 the Next Destination?

New Delhi, December 18, 2025: The Indian equity market is entering the December 18 session on shaky ground. After three consecutive days of losses, the Nifty 50 closed on Wednesday at 25,818, down 0.16%. While the headline drop seems marginal, the underlying technical structure suggests that the bears are gaining control. If the index fails to hold its immediate “floor,” a deeper correction toward the 25,400 mark could be on the cards.

The Technical Picture: 25,700 is the Line in the Sand

The Nifty has been struggling to break above the 25,950–26,050 resistance zone. On Wednesday, it hit an intraday low of 25,770, flirting dangerously with its short-term support levels.

Technical analysts point out that the 25,700–25,800 range is a high-stakes zone. This area is bolstered by the 50-day Exponential Moving Average (EMA). However, if Nifty decisively breaks below 25,700, it would signal a breakdown from its current consolidation phase. Such a move would likely trigger a wave of long unwinding, potentially dragging the index down to 25,400 or even 25,200 in the coming sessions.

Key Market Triggers to Watch

Several factors are weighing on investor sentiment as we head into Thursday’s trade:

• Persistent FII Selling: Foreign Institutional Investors (FIIs) remain in “sell mode,” offloading equities worth over ₹2,381 crore in recent sessions. While Domestic Institutional Investors (DIIs) are trying to cushion the fall, the lack of fresh foreign capital is capping any meaningful upside.
• Rupee Volatility: The Indian Rupee has been under immense pressure, recently touching all-time lows near 90.75 before a slight recovery to 90.37. Currency weakness typically makes domestic equities less attractive to global funds.
• Global Cues: US markets remain subdued as investors wait for clearer signals on monetary policy. Additionally, uncertainty surrounding the India-US trade deal continues to keep big players on the sidelines.
• Regulatory Shifts: The recent SEBI board meeting, which approved reforms in mutual fund expense ratios and IPO documentation, is also being digested by the market.

Sectoral Performance: PSU Banks Provide a Silver Lining

While the broader market breadth remains weak—with over 2,000 stocks declining on Wednesday—there are pockets of resilience. PSU Banks emerged as the top gainers, led by State Bank of India (SBI), which surged 1.8% to nearly ₹979.

Conversely, the Media, Realty, and Consumer Durables sectors are facing the most heat. High-profile laggards like Max Healthcare and Apollo Hospitals contributed to the downward pressure on Wednesday.

Strategy for December 18

For traders, the “Buy on Dips” strategy is currently under test. Here is the suggested setup:

The Bottom Line: If Nifty opens flat or weak and fails to reclaim 25,900, caution is advised. A breach of 25,700 should be viewed as a signal to tighten stop-losses or shift to a defensive stance, as the path to 25,400 would then be wide open.