Technical View: Bears could be unstoppable if Nifty breaks rising support trendline; Bank Nifty outperforms for second day

Nifty Outlook for October 1

The bulls seem to be finding it tough to gain control of the market as the Nifty 50 experienced persistent selling pressure for the eighth consecutive session, breaking the 24,600 level intraday on September 30, during the monthly F&O expiry session. The index shed more than 3 percent over the last eight days but ended the month with a 0.75 percent gain, forming a bullish candle with a long upper shadow, signalling significant pressure at higher levels in second half of the month.

The Nifty 50 is currently about 100 points away from its crucial support at 24,500, which lies on the upward-sloping trendline. Given the prevailing bearish sentiment, this support level appears vulnerable. If the index decisively breaks below this support, the 24,400–24,300 zone could easily be tested in the upcoming October series. However, on the upside, the 24,700–24,800 zone is expected to act as a key resistance, according to experts.

The Nifty 50 opened higher around 24,700 but failed to sustain those levels due to profit-taking. The index dropped to 24,588 before closing the last session of the September series at 24,611, down by 24 points, with above-average volumes. This formed a bearish candle with both upper and lower shadows on the daily charts.

Today's market action indicates choppy movement or a falling wedge formation. "The downside momentum has slowed in the last couple of sessions, and the Nifty is positioned above the key cluster support at 24,500–24,400 (which includes the ascending trendline, previous swing lows, and the 200-day EMA)," said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

The index has continued to form a lower high-lower low structure for eight days, while the MACD has dropped below the zero line, with a bearish crossover and a weakening histogram. The RSI has also declined to 38.13.

According to Shetti, the underlying trend for Nifty remains weak, with choppy movement. "A further decline from here could drag the Nifty to the support zone of 24,500–24,400 levels. A sustainable move above the 24,750–24,800 zone could trigger a short-term bounce-back in the market," he added.

On the options front, the maximum Call open interest is seen at the 25,000 strike, followed by the 24,700 and 24,900 strikes, with the maximum Call writing at the 24,700, 25,000, and 24,600 strikes. On the Put side, the 24,600 strike holds the maximum Put open interest, followed by the 24,000 and 24,500 strikes, with the maximum Put writing at the 24,600, 24,300, and 24,000 strikes.

Based on the above-mentioned weekly options data, the Nifty 50 is expected to take support at the 24,600–24,500 zone, with resistance at 24,700–24,900.

Bank Nifty

The Bank Nifty advanced by 175 points to 54,636, outperforming the benchmark Nifty 50. The index formed a small bearish candle with both upper and lower shadows, resembling a high-wave pattern on the daily charts (following a Doji pattern in the previous session), signaling indecision among bulls and bears.

"The 100-day EMA zone of 54,850–54,950 will act as a crucial resistance for the index, while, on the downside, the 54,200–54,100 zone will provide important support," said Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities.

Meanwhile, the India VIX, the fear gauge, fell further to 11.07, down by 2.64 percent. However, it continues to sustain above its short-term moving averages, suggesting that bulls need to remain cautious.

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