Technical View: Bears erase 450 pts from Nifty's recent swing high, put 100 DEMA at risk; Bank Nifty hits new August low

Nifty Outlook for August 28

The Nifty 50 was caught in a bear trap on August 26, falling 1 percent after the Trump administration issued an official notification imposing an additional 25 percent tariff on India, effective August 27. This brings the total U.S. tariff on Indian goods to 50 percent.

In response, the index broke below the 20-day and 50-day EMAs, as well as the midline of the Bollinger Bands, all in a single session — signaling growing bearish sentiment. This has now placed the 100-day EMA (24,635) at risk, ahead of the monthly F&O expiry scheduled for August 28.

According to experts, if the index decisively breaks the 100-day EMA, a further correction towards 24,340 (August low) cannot be ruled out in the coming sessions. However, in case of a rebound or the index finding support at Tuesday’s low, the level to watch would be 24,850, which marks the confluence of the 10, 20, and 50-day EMAs.

On the day, the Nifty 50 opened lower at 24,899 and remained under pressure throughout the session. It hit an intraday low of 24,690 in late trade before closing 256 points (1.02 percent) down at 24,712. The index formed a long bearish candle on the daily chart, accompanied by a subdued overall market breadth.

With this correction, the index has now lost 450 points from its recent swing high of 25,150 (touched last Thursday). The Relative Strength Index (RSI) dropped to 45.92, giving a bearish crossover, while the MACD maintained a positive crossover, with the histogram still above the zero line.

Adding to the negative sentiment, the opening upside gap of August 18 was pierced on the downside, and the Nifty failed to show any recovery from the gap support near 24,700.

“This is not a good sign,” said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.

According to him, the underlying short-term trend of the Nifty remains weak, and the next support levels to watch are around 24,600, followed by 24,400.

However, any sustained bounce above 24,900 could trigger short covering in the near term, he added.

The market will remain shut on August 27 for Ganesh Chaturthi.

Options Data

The monthly options data suggests that the Nifty 50 is likely to remain in the 24,500–25,000 range in the near term.

The maximum Put open interest was seen at the 24,000 strike, followed by 24,500, 24,600, and 24,700. Maximum Put writing was observed at the 24,700 and 24,600 strikes.

On the Call side, the 25,000 strike held the maximum Call open interest, followed by 24,800 and 25,200. Maximum Call writing was seen at the 25,400 strike, followed by 25,350 and 25,550.

Bank Nifty: Breaks 100-Day EMA

The Bank Nifty also witnessed significant selling pressure, declining 689 points (1.25 percent) to close at 54,450, its lowest closing level since May 9. It formed a long red candle on the daily timeframe.

Crucially, the index decisively broke below the 100-day EMA (for the first time since April) and breached the August low in a single session, confirming a bearish undertone.

According to Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities, a breakdown below the 100-day EMA typically signals a trend reversal, prompting caution from market participants.

Adding to the negative setup, the daily RSI fell below the 40 mark and continues to trend downward, indicating weakening momentum and increasing selling pressure. The falling RSI suggests that the index may stay under pressure unless a strong reversal or support level emerges.

Sudeep Shah expects the Bank Nifty to continue its downward trajectory, potentially testing 54,000, followed by 53,500 in the near term.

However, on the upside, the 54,900–55,000 zone will act as a key resistance area, he said.

India VIX Climbs

Meanwhile, the India VIX, often referred to as the fear gauge, rose above its short-term moving averages and closed 3.7 percent higher at 12.19, signaling rising caution among bulls.

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