Technical View: Bears could get more dominant if Nifty breaks 25,300 support, India VIX reaches over 14-month low

Nifty Outlook

The Nifty 50 extended its downward journey for another session on July 10, approaching the key support zone of 25,300–25,200, from where the previous consolidation breakout had occurred, followed by a sharp rally. The half-percent correction on Thursday, which was also the weekly F&O expiry session, occurred despite the India VIX falling to its lowest level in more than 14 months—a scenario generally considered favourable for the bulls.

The India VIX declined by 2.24 percent to 11.67, its lowest closing level since April 26, 2024, extending its downtrend for the third consecutive day.

If the index fails to take support at the 25,300–25,200 zone, bears could gain dominance and potentially drag the index down to 25,000, the next key support area. However, in case of a rebound, 25,500–25,600 is the level to watch on the upside, according to market experts.

The Nifty 50 opened above 25,500 and hit a day’s high of 25,524, but failed to sustain early gains as selling pressure intensified throughout the day. The index corrected to an intraday low of 25,340 before closing near the day's low at 25,355, down 121 points, forming a long bearish candle on the daily chart. Negative crossovers in momentum indicators, along with a weakening histogram, suggest further downside potential.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the Nifty is currently nearing an important support zone around 25,300–25,200 levels. This corresponds to the previous swing highs of the last month, as per the concept of change in polarity, and there's a higher probability of a sharp bounce-back from these lower supports in the near term.

However, immediate resistance is placed at 25,550, based on the broader high-low range movement, he added.

Weekly options data suggest the Nifty may continue to trade within the 25,000–26,000 range in the short term.

The maximum Call open interest was observed at the 25,500 strike, followed by 26,000 and 25,600 strikes, while the maximum Put open interest was placed at the 25,500 strike, followed by 25,000 and 25,400 strikes.

The maximum Call writing was seen at the 25,500 strike, followed by 25,400 and 25,600 strikes, followed by the maximum Put writing was observed at the 25,100 strike, followed by 25,400 and 25,000 strikes.

Bank Nifty

The Bank Nifty also traded lower, falling 258 points to close below the 57,000 mark at 56,956, forming a bearish candle on the daily timeframe. The index also closed below its 10-day EMA of 56,995, accompanied by negative momentum crossovers and a weakening histogram.

The daily RSI slipped below the 60-level, indicating waning upside momentum and a more cautious outlook among traders in the near term.

According to Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities, the 20-day EMA zone of 56,750–56,700 is likely to act as an immediate support area for the index.

On the upside, a decisive move above the resistance zone of 57,300–57,400 will be essential to revive bullish sentiment and open the door for further gains, he added.