By Vineet Kumar 
Technical View: Nifty Hits Fresh 5-Month Low, Bearish Sentiment Could Drag Benchmark to 23,200; Bank Nifty Defends 200 DEMA
The Nifty 50 continued its downtrend, hitting a fresh five-month low as bearish sentiment prevailed. The index closed at 23,350, its weakest level since June 12, after shedding 169 points during the session. This marked the fifth consecutive close below the critical 200-day EMA (23,540), further underscoring the weakness in the market.
Key Technical Levels
The next major support for Nifty is 23,200, which aligns closely with the 50-week EMA and the crucial 61.8% Fibonacci retracement (calculated from June’s low to September’s record high). If this level breaks, the index could slide further to test 23,000 in the near term.
On the upside, resistance is expected at 23,800, this week’s high. A decisive breakout above 24,000 is required to reverse the current trend, but until that happens, pullbacks should be seen as opportunities to exit long positions, as per Osho Krishan, Senior Analyst at Angel One.
“The lower highs and lower lows formation on the daily charts is a clear sign of persistent selling pressure. The Nifty needs strong momentum to breach the 200-DSMA zone of 23,580-23,600,” he noted.
What the Charts Say
The daily chart displayed a bearish candlestick pattern with higher-than-average volumes, signaling continued selling interest.
Momentum indicators like RSI and MACD remained firmly in sell mode, pointing to further downside.
The index opened lower at 23,488 and stayed under pressure throughout, touching an intraday low of 23,263.
Options Analysis
On the Call side, the maximum open interest (OI) is at the 24,000 strike, followed by 23,800 and 23,500, indicating strong resistance at these levels.
On the Put side, maximum OI is concentrated at 23,000, with notable writing at 23,300, 23,400, and 23,500, highlighting the importance of 23,300 as a near-term support level.
Bank Nifty: A Glimmer of Resilience
The Bank Nifty faced heavy selling, dropping 865 points intraday before recovering to close at 50,373, down 254 points. Despite the correction, the index managed to defend its 200 DEMA (49,900) on a closing basis, forming a Hammer candlestick pattern on the daily chart. This pattern, characterized by a long lower shadow, indicates buying interest and suggests a potential reversal if the index sustains above today’s high of 50,652.
Hrishikesh Yedve, AVP at Asit C. Mehta Investment Intermediates, explained, “If the index holds the 49,787 level (the Hammer’s low), we could see a relief rally towards 51,000-51,500. However, failure to defend this level may invite further selling pressure.”
Rising Volatility Adds to Caution
The India VIX, the fear gauge, climbed for the third straight session, rising 2.09% to 15.99. This increase signals heightened market anxiety, urging bulls to remain cautious.
Sentiment Drivers
Market sentiment continues to take a hit due to a combination of factors:
1. Weak Global Cues: Declines in Asian markets add to the bearish outlook.
2. Domestic Concerns: Ongoing uncertainties surrounding the Adani group are dampening investor confidence.
3. Geopolitical Tensions: Escalation in the Russia-Ukraine conflict is another cloud over the market.
A Trader’s Take
For traders, these conditions resemble walking on thin ice. If you’re holding long positions, treat any rally as an exit opportunity unless the Nifty decisively breaks above 24,000. On the other hand, short positions can ride the trend towards 23,200 or even 23,000. As for the Bank Nifty, the Hammer pattern offers some hope, but only if key levels are respected.
Imagine you’re driving on a road with poor visibility. You wouldn’t speed up without knowing what’s ahead, right? Similarly, in the current market, caution is your best
co-pilot. Stay alert and stick to well-defined levels!
