Technical View: Bears Drag Nifty to Two-Month Low; Breakdown Below 20-WMA May Deepen Correction

The Indian equity market remained under strong selling pressure as bears tightened their grip, pushing the Nifty 50 to a fresh two-month low. The index has corrected nearly 700 points from its recent record high, with almost 200 points lost in the January 9 session alone, as heavy volumes accompanied growing concerns over global trade tensions triggered by fresh tariff-related developments.

Nifty Slips Below Key Levels

After witnessing sharp intraday volatility, the Nifty gradually gained bearish momentum and extended losses through the session. The index touched an intraday low of 25,623, hovering just above the 100-day EMA (25,618), before ending the day 194 points (0.75%) lower at 25,683 — its lowest closing level since November 10, 2025.

Technically, the index formed another long bearish candle and closed below the lower Bollinger Band, signaling strong downside pressure. On a weekly basis, the Nifty registered a steep loss of 645 points (2.45%), confirming a continuation of the corrective trend.

Crucial Supports and Resistance Zones

If the index sustains below 25,700, immediate support is seen at 25,580, which coincides with the 20-week SMA. A decisive break below this could open the doors for a deeper decline toward the 25,400–25,300 support zone.

On the upside, any recovery attempt is likely to face stiff resistance near 25,900–26,000, where strong supply is expected to emerge.

Momentum Indicators Signal Strong Bearish Bias

Momentum indicators across both daily and weekly timeframes have turned decisively bearish:

RSI (Daily) slipped below 40 and currently stands at 38.55, indicating weak momentum

MACD (Daily) remains below the signal line with a further weakening histogram

RSI (Weekly) dropped to 53.16, falling below its signal line

MACD (Weekly) turned bearish, with the histogram slipping below the zero line for the first time since the October 6–10 week

These signals collectively point to strong bearish dominance in the market.

Options Data Confirms Cautious Outlook

Weekly options data highlights 25,500 as a crucial support, while 26,000 continues to act as a strong resistance zone.

Maximum Call OI: 26,000 strike, followed by 26,100 and 26,200

Heavy Call Writing: 25,800, 25,900, and 26,000

Maximum Put OI: 25,500 strike, followed by 25,700 and 25,600

Strong Put Writing: 25,400, 25,200, and 25,650

This positioning suggests limited upside in the near term unless strong buying emerges.

Bank Nifty Turns Weak as Volatility Rises

The Bank Nifty, which had been relatively resilient, also showed signs of weakness. The index slipped below its short-term moving averages and the mid-line of the Bollinger Bands, indicating a shift toward a bearish structure.

Meanwhile, the India VIX surged 3.07% to 10.93, marking a one-month high and moving above its medium-term moving average. Rising volatility signals increasing caution among traders, and discomfort for bulls could intensify further if the VIX approaches long-term averages.

Conclusion

Overall, the technical structure suggests that bears are firmly in control. A decisive breakdown below the 20-week moving average could accelerate downside momentum, while any bounce is likely to be sold into unless the index reclaims key resistance levels convincingly.