Nifty: Volatility surge signals cautious market setup
Dhupesh Dhameja,
Derivatives Research Analyst,
SAMCO Securities
The Nifty index witnessed a volatile session and remained under pressure, closing at 23,643.50, down 46 points (-0.19%).
Derivatives Analysis Report
Nifty struggles to regain momentum
On the daily chart, the index continues to trade below its 20-DEMA near 23,880 and is struggling to reclaim the key 0.382 Fibonacci retracement zone placed around 23,770, indicating that the recent pullback recovery is behaving more like a breakdown retest rather than a sustainable reversal. The repeated rejection near 23,750–23,850 highlights persistent supply pressure, where sellers continue to dominate on every recovery attempt.
Technically, the index has been forming a weak lower-high structure after the recent sharp correction, reflecting lack of aggressive institutional buying at higher levels. The inability to sustain above the previous breakdown zone suggests that market participants remain cautious and are using pullback rallies to reduce long exposure.
On the weekly chart, the index continues to trade below the crucial 0.50 Fibonacci retracement zone near 24,260, indicating that the broader trend structure remains cautious despite intermittent recovery attempts.
The Momentum indicator, RSI, on the daily timeframe is hovering near 45, reflecting weak momentum and absence of strong directional strength in the ongoing rebound. Meanwhile, India VIX surged sharply by over 11% to 18.79, signaling elevated volatility and increased uncertainty, which could continue to trigger sharp two-sided moves in the near term.
From a derivatives perspective, PCR stands near 0.94, indicating a neutral-to-cautious undertone. Option data shows aggressive call writing near 23,800–24,000 levels, restricting upside momentum, while the meaningful Put writing around 23,500–23,300 is offering immediate support on declines.
The overall setup suggests that the market remains trapped in a volatile consolidation phase with a negative bias unless the index decisively reclaims the 23,770–23,850 resistance cluster. As long as the index sustains below 23,850, traders may continue to prefer a sell-on-rise strategy, while a decisive breakdown below 23,400 could trigger fresh weakness towards 23,150 levels.
On the upside, only a strong close above 23,850 may revive bullish momentum and open the path towards 24,000–24,250.
Nifty Bank continues to witness distribution on rallies amid subdued momentum
Nifty Bank index extended its corrective phase and closed at 53,710.35, down 418 points (-0.77%), reflecting continued pressure in heavyweight banking counters. The index attempted an intraday rebound but failed to sustain near higher levels, indicating that recovery rallies are still witnessing selling interest.
On the daily chart, Nifty Bank is trading below its 20-DEMA placed near 54,840 and continues to face rejection near the 54,400–54,500 zone, which coincides with the 0.382 Fibonacci retracement level. This price behavior suggests the recent bounce is turning into a breakdown retest rather than a strong reversal setup.
Structurally, the index is forming a sequence of lower highs and lower closes, highlighting weakening price strength and lack of aggressive long buildup from institutions. The inability to reclaim the previous breakdown range indicates traders are adopting a defensive approach in banking counters, especially near resistance zones.
On the weekly timeframe, the index remains below the key 0.50 retracement level near 55,850, keeping the broader undertone cautious despite intermittent pullback moves.
Momentum indicator RSI on the daily chart is hovering near 42, reflecting weak momentum and limited participation from the buying side, while the weekly RSI near 41 suggests broader momentum still remains subdued. Rising volatility and lack of follow-through buying continue to keep the banking index under pressure.
From the derivatives front, PCR stands near 0.77, indicating a cautious market stance. Option data highlights aggressive call writing around 54,000–55,000 strikes, signaling strong overhead resistance, whereas put writers are active near 53,500–53,000, offering immediate downside support. The overall setup indicates range-bound but weak trading conditions, with volatility likely to remain elevated.
As long as Nifty Bank trades below 54,500, traders may continue to adopt a cautious sell-on-rise approach. A sustained move below 53,500 could accelerate downside pressure towards 53,000–52,700, while only a decisive close above 54,800 may improve sentiment and trigger a broader recovery towards 55,500.
Technical Analysis Report
Nifty Ends 2.20% Lower as Rupee Hits Fresh Historic Lows
Om Mehra, Technical Research Analyst, SAMCO Securities
Nifty slipped marginally by 0.19% to close at 23,643.50. The daily chart formed a small-bodied candle with wicks on both sides, reflecting indecision after the previous session's sharp recovery. The index tested the 23,839 level during the session but failed to sustain higher levels and drifted lower into the close.
On the weekly timeframe, Nifty declined 2.20%, forming a bearish candle with a visible lower wick. The lower wick indicates that buying interest emerged during the midweek selloff, but failed to hold gains. The index continues to trade below the 20-Day SMA, keeping the broader setup under pressure. The RSI is placed near 45, holding below the neutral zone.
The USD-INR touched 96.14, marking fresh historic lows for the rupee. The continued weakness in the currency adds to the broader cautious undertone and remains a headwind for market sentiment.
On the downside, the 23,400–23,300 zone remains the immediate support zone. On the upside, the 23,800–23,900 zone remains the immediate resistance band. Unless Nifty reclaims this zone on a closing basis, the near-term outlook is likely to remain range-bound with a negative tilt.
Nifty Bank declined 0.77% to close at 53,710.35. On the weekly timeframe, Nifty Bank shed 1,600 points or was down 2.89%, forming a bearish candle. The weekly chart shows the index is now approaching the support zone near 53,000–53,500, which has acted as a short-term base.
The RSI has slipped back to 41, reversing the improvement seen in the prior session. The index remains well below the 50-Day SMA.
Nifty PSU Bank declined sharply by 1.80% to settle at 8,027.20, while Nifty Private Bank fell 0.21% to close at 26,100.10, indicating that PSU banks were the primary drag on the index during the session.
On the downside, the 53,200–53,000 zone remains the immediate support. On the upside, the 54,200–54,500 zone becomes the immediate resistance band. Unless Nifty Bank reclaims this zone on a closing basis, the near-term outlook is likely to remain under pressure.
