Technical View: Monday's low could get tested again if Nifty decisively falls below 22,000, India VIX hits 10-month high

The India VIX, which measures market volatility, spiked 65.7 percent to 22.79, the highest level since June 4, 2024, creating significant discomfort for bulls.

Bears maintained their tight control over the market despite a recovery from the day’s low, driving the benchmark index, Nifty 50, down by over 3 percent on April 7. Selling pressure was seen across sectors. The major equity markets globally were hit harder than India. Hence, given that the VIX reached a 10-month high, experts believe the market sentiment is expected to remain weak in the short term.

According to them, 22,000 is the immediate support for the index, followed by 21,744 (Monday’s low), which is a crucial support level. However, in case of further recovery, 22,500 is the immediate resistance, followed by 22,850.

The Nifty 50 lost more than 5 percent after a sharp gap-down opening at 21,758. However, it managed to recoup nearly 2 percent of the losses from the day’s low before closing with a loss of 743 points, or 3.24 percent, at 22,162. The index formed a long bullish candlestick pattern on the daily charts, as the closing was higher than the opening levels.

All short- to medium-term moving averages (5, 10, 20, and 50-day EMAs) tilted downward, while the momentum indicator, RSI (Relative Strength Index), dropped to the 33.69 zone. The MACD (Moving Average Convergence Divergence) has also given a negative crossover.

According to Shrikant Chouhan, Head of Equity Research at Kotak Securities, the short-term outlook of the market is still weak. He believes that the current market environment is extremely volatile and uncertain. Hence, traders may prefer to adopt a cautious stance in the near future, he advised.

In the short term, he feels 22,000 would be the key level to watch. “If the market manages to trade above this level, the pullback formation could continue up to 22,500-22,600.”

On the flip side, a dismissal of 22,000/21,744 could lead to further weakness. Below this level, the market could retest 21,800, and additional weakness may continue, potentially dragging the index down to 21,650, he said.

According to the weekly options data, the maximum Call open interest was seen at the 23,000 strike, followed by the 22,700 and 22,000 strikes, with the maximum Call writing at the 22,700 strike, and then the 22,000 and 22,500 strikes. On the Put side, the 22,000 strike holds the maximum open interest, followed by the 21,500 strike, with the maximum writing at the 22,100 strike, and then the 21,800 and 21,600 strikes.

The above options data suggests that the Nifty 50 may see a broad trading range of 21,500-23,000 in the short term.

Bank Nifty

The Bank Nifty was also under severe pressure, falling 1,643 points, or 3.2 percent, to finish at 49,860 after the sharp gap-down opening. The index also formed a bullish candle with an upper shadow on the daily charts, signaling pressure at higher levels. With Monday’s fall, the index traded well below all key moving averages.

“The index has failed to hold above its 200-day EMA and gave a range breakdown on the daily scale. Now, as long as it holds below the 50,250 zone, some weakness could be seen towards 49,500, then 49,000 levels. On the upside, resistance is seen at 50,250, then 50,500 levels,” said Chandan Taparia, Senior Vice President | Head of Technical Research and Derivatives at Motilal Oswal Financial Services.

Meanwhile, the India VIX, which measures market volatility, spiked 65.7 percent to 22.79, the highest level since June 4, 2024, creating significant discomfort for bulls.

Disclaimer: Moneywealth research provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

SEBI registered research analyst

Stock market

Accurate intraday tips

Call or whatsapp: +91 9924987385 / +91 7096190322

www.moneywealth.co.in