Nifty 50 Slumps Below – Nifty 50 Faces Selling Pressure Again
The Indian stock market opened the week on a weak note as the Nifty 50 decisively broke its trendline support at 22,600 and closed with a sharp decline of over 1 percent on February 24. This decline occurred despite a continuous drop in the volatility index, India VIX, which fell 0.6 percent to 14.44, marking its fifth consecutive session of decline.
Market Performance and Technical Breakdown
The Nifty 50 opened with a significant gap-down of 186 points at 22,609 and remained under selling pressure throughout the trading session. The index recorded an intraday low of 22,519 before closing at 22,553, down by 243 points, or 1.06 percent.
The bearish market sentiment led to the formation of a bearish candlestick pattern with a minor upper shadow on the daily charts. According to technical experts, this movement signals a downside breakout of the 22,700 support level, which had previously acted as a key short-term range. This development raises concerns about further downside risks in the coming sessions.
Expert Analysis on Nifty 50
According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the underlying trend of Nifty remains negative. “There is a possibility of further weakness, with the next immediate support placed at 22,400, which aligns with the 20-month exponential moving average (EMA). If this level is breached, the major support lies at 22,000, corresponding with the 100-week EMA,” he noted. On the upside, any potential rebound is likely to face resistance in the 22,700-22,800 range.
The market sentiment suggests that the ongoing sell-on-rally approach is likely to persist, making any short-term recovery unsustainable. Market participants are advised to remain cautious and monitor the key support and resistance levels closely.
Options Data Insights
The monthly options data indicates that 22,500 is emerging as a strong immediate support level, followed by 22,300. On the resistance side, the 22,700-22,800 zone remains a key hurdle. In the options market, the maximum Put open interest was observed at the 22,500 strike, followed by 22,600, 22,300, and 22,000 strikes. Additionally, significant Put writing activity was seen at the 22,600, 22,550, and 22,650 strikes.
On the Call side, the highest open interest was recorded at the 23,000 strike, followed by the 22,800 and 23,500 strikes. Notably, the maximum Call writing activity was at the 22,600 strike, followed by 22,800 and 22,700, further reinforcing resistance at these levels.
Sectoral Performance and Market Sentiment
The bearish market sentiment affected multiple sectors, with technology, metals, banking, financial services, and oil & gas stocks witnessing significant declines. The broader markets also saw a decline, as both the Nifty Midcap and Smallcap 100 indices fell by around 1 percent each.
Bank Nifty Holds Key Support Levels
Despite the broader weakness, the Bank Nifty index fared slightly better than the Nifty 50. It closed lower by 329 points, or 0.67 percent, settling at 48,652. However, the index managed to defend its key support levels of 48,300 and 48,500 on a closing basis.
The Bank Nifty formed a small-bodied bullish candlestick pattern with a minor upper and long lower shadow, resembling a Dragonfly Doji-like pattern. Though not a classical Dragonfly Doji, this pattern generally signals a potential bullish reversal.
According to Chandan Taparia, Senior Vice President and Head of Technical Research and Derivatives at Motilal Oswal Financial Services, “If the index holds below the 48,750 zone, some weakness may be seen towards 48,250 and then 48,000. However, on the upside, resistance is seen at 49,000 and then 49,250 levels.”
India VIX Trends and Market Outlook
The India VIX, which measures market volatility, continued its downtrend, declining by 0.6 percent to 14.44. A sustained decline below the 14 level would provide more comfort to the bulls. However, the overall market sentiment remains cautious, as traders anticipate further downside risks before a meaningful recovery occurs.
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Key Support and Resistance Levels
- Immediate Support: 22,500, followed by 22,400 (20-month EMA)
- Major Support: 22,000 (100-week EMA)
- Immediate Resistance: 22,700-22,800
- Major Resistance: 23,000
For the Bank Nifty:
- Support Levels: 48,500, 48,300, and 48,000
- Resistance Levels: 48,750, 49,000, and 49,250
Market Sentiment and Future Expectations
Market participants are advised to exercise caution in the near term. Given the continued selling pressure and the breakdown of key technical levels, traders and investors should adopt a defensive approach and wait for clear signals before initiating fresh long positions. The broader sentiment remains bearish, with experts warning against any premature optimism regarding a rebound.
With the earnings season approaching and global macroeconomic factors influencing market trends, traders should closely monitor developments in both domestic and international markets. Additionally, central bank policies, inflation data, and geopolitical events could impact market movements in the coming weeks.
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Conclusion
The Nifty 50 started the week on a bearish note, breaking crucial support levels and signaling the possibility of further downside. With the immediate support at 22,400 and resistance at 22,700-22,800, traders should remain cautious and adopt a sell-on-rally approach. The Bank Nifty, though relatively resilient, remains vulnerable below 48,750. Market participants should closely monitor sectoral trends, options data, and India VIX levels to gauge future movements.
With increased uncertainty and technical weakness in the market, traders should focus on risk management and avoid aggressive bets until a clearer trend emerges.
