Technical View: Bears eye deeper correction if Nifty slips below 25,000; Bank Nifty breakdown points to further weakness amid elevated VIX

Nifty outlook for March 2

• Weekly options data suggest that 25,000 to act as key short-term support
• Resistance is seen at 25,400–25,500
• VIX climbs back above all key moving averages, signalling nervousness among bulls

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The Nifty 50 was convincingly caught in a bear grip on February 27, falling over a percent amid broad-based selling across indices after remaining in a consolidation range of 25,350–25,700 for a week. It broke below the much-awaited 200-day EMA and tested the lower Bollinger Bands in a single session with above-average volumes, signalling the continuation of the lower highs–lower lows formation on February 27.

The rising VIX, trading below all key moving averages, and consistent sell signals from momentum indicators are not good signs for the market. Weak global cues, lack of progress in US–Iran nuclear talks, and inconsistent foreign flows weighed on market sentiment.

Immediate support is now seen in the 25,000–24,900 zone (psychological and rising trendline supports). A decisive fall below this range could open the door to the Budget Day low of 24,571. However, in case of a bounce back, the 25,350–25,500 levels are crucial to watch, followed by 25,600 as a key resistance level, according to experts.

The Nifty 50 opened lower at 25,460 and remained under pressure throughout the session. Selling widened further in late trade, and the index finished at 25,179, down 318 points (1.25 percent), forming a long bearish candle on the daily timeframe. The index also broke the upward-sloping support trendline connecting the lows of February 1 and February 24.

Momentum indicators maintained sell signals, with the RSI declining to 40.65. The MACD weakened further, with additional downside seen in the histogram. The Stochastic RSI flattened at 8.25 and entered the oversold zone. All this indicates continued weakness in the near term.

"The Nifty slipped below its crucial 200-DMA placed at 25,350, which is now expected to act as an immediate resistance zone. The index continues to exhibit a lower top and lower bottom formation on the daily chart, reflecting a weakening trend," said Nilesh Jain, VP – Head of Technical and Derivative Research at Centrum Finverse.

The key psychological support is now seen at the 25,000 mark, and the overall structure points toward continued weakness, with pullbacks likely to face selling pressure, he added.

Meanwhile, the India VIX, which measures expected market volatility, spiked after four days of weakness. Rising above short-term moving averages, it climbed back above all key moving averages, signalling nervousness among bulls. It jumped 4.9 percent to 13.7 on Friday, though it was down 4.6 percent for the week. As long as it firmly stays above the 12 zone, bulls may remain at significant risk.

The weekly options data suggest that 25,000, where the maximum Put open interest is placed, is expected to act as key short-term support, while resistance is seen at 25,400–25,500, which holds the maximum Call open interest.

The maximum Call writing was seen at the 25,400, 25,300, and 25,350 strikes, while the maximum Put writing was placed at the 25,150, 25,100, and 25,000 strikes.

Bank Nifty

The Bank Nifty decisively broke below the last four-day consolidation range by breaching immediate supports at 61,000 and 60,800. It fell 659 points (1.08 percent) to 60,529 with above-average volumes, forming a long bearish candle on the daily charts.

Further, the index fell below the 10-day and 20-day EMAs, as well as the midline of the Bollinger Bands (60,635), in a single session. If the index sustains below 60,600, the 60,000–59,800 zone (50-day EMA and 10-week EMA) will be the next levels to watch on the downside, followed by 59,500. On the upside, hurdles are seen at 60,800–61,000, followed by 61,500, according to experts.

Momentum indicators weakened further, with the RSI declining to 50.66 and sustaining below the reference line. The MACD turned bearish, with the histogram falling below the zero line for the first time since February 3. The Stochastic RSI has maintained a negative crossover since February 19. All this indicates increasing bearish momentum.

For the week, the banking index dropped 1.05 percent and formed a red candle on the weekly timeframe.

"The 60,300–60,250 zone will act as an immediate crucial support base for the index. A breach below this range could drag Bank Nifty toward the 59,500 level," said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.

On the upside, according to him, the 60,700–60,800 zone is expected to act as an immediate significant resistance band. A sustained breakout above 60,900 could pave the way for a near-term rally toward the 61,500 level in the short term.