Technical View: Nifty risks deeper fall below 25,200 as VIX, momentum indicators flash warning; Bank Nifty holds 61,000

Nifty outlook for February 25

• Break below 25,300-25,200 zone could open door for a move toward 25,000
• 25,600 to act as a hurdle
• India VIX sustains above 14 zone, signalling concerns for bulls
• Bank Nifty defends 61,000 despite pressure in Nifty 50

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The benchmark Nifty 50 was caught in a bear trap after the positivity seen in the previous couple of sessions, falling over 1 percent amid high volumes on February 24, the expiry day for monthly derivative contracts. The index decisively fell below the 20-, 50-, and 100-day EMAs, as well as the midline of the Bollinger Bands, and also tested the 200-day SMA in a single session, signalling that the bears have the upper hand in the short term.

Tuesday's fall, largely driven by IT stocks amid fears of AI-driven disruption, clearly indicated that the upward rally led by the Supreme Court verdict on Trump tariffs was short-lived, and that tariff uncertainty is likely to persist for a long time. Escalating US-Iran tensions also weighed on the market.

The index is now near the crucial support levels of the 200-day SMA and EMA (25,300 and 25,200). A break below these zones could open the door to the psychological support level of 25,000, which is key for a move toward the Budget Day low of 24,571. However, in case of a bounce back in the following session, 25,600 is expected to act as a hurdle (20-day SMA), and sustaining above it could raise the possibility of renewed buying interest. Until then, sideways action may be seen, experts said.

In the previous two-day rebound, the index could not touch the downward-sloping resistance trendline (above 25,700), which remains crucial for an upward rally.

Momentum indicators clearly gave a sell signal on Tuesday. The RSI sustained below the signal line and dropped to 45.39, while the MACD fell below both the reference line and the zero line, with the first downtick in the histogram since February 2. The Stochastic RSI dropped to 23.57 and has remained below the signal line since February 19.

The Nifty 50 opened lower and remained under pressure throughout the session. The index hit an intraday low of 25,328 before showing some recovery in late trade to close at 25,425 (the lowest closing level since February 2), down 288 points (1.12 percent).

It formed a bearish candle with a minor lower shadow on the daily timeframe, indicating that bears are in control despite buying interest at lower levels.

"The broader structure remains sideways as long as the Nifty trades within the 25,200–25,800 range, which is acting as immediate support and resistance respectively," said Nilesh Jain, VP and Head of Technical and Derivative Research at Centrum Finverse.

According to him, although a short-term pullback cannot be ruled out, it is unlikely to sustain at higher levels as momentum indicators and oscillators have turned negative.

Meanwhile, the fear gauge, India VIX, remained subdued for another session but sustained above the 14 zone and well above all key moving averages, signalling concerns and discomfort for bulls. It is necessary for the VIX to fall and sustain below the 12 level for bulls to make a comeback. It was down 0.12 percent at 14.15 after witnessing a day’s range of 12.3–14.9.

The weekly options data indicated that the Nifty may face immediate resistance at 25,500, where the maximum Call open interest is placed, while support is placed at 25,000, which has the maximum Put open interest.

Maximum Call writing was seen at the 25,500, 25,600, and 26,000 strikes, while the 25,000, 25,500, and 25,400 strikes hold the maximum Put writing.

Bank Nifty

The Bank Nifty not only outperformed the benchmark Nifty 50 but also defended the previous day’s low as well as the 61,000 level on a closing basis, though it weakened by 217 points (0.35 percent) to 61,047 during the monthly F&O expiry session.

The banking index stayed above the 10-day EMA on a closing basis, resulting in sustainability above all key moving averages, signalling that the trend remains up despite ongoing consolidation and range-bound trading.

The RSI dipped to 57.14 and showed a bearish crossover but has remained in a range for the last few sessions. The MACD sustained above the reference line, though the histogram registered consistently fading momentum. The Stochastic RSI has remained in a negative crossover since February 19. All this indicates weakening momentum, though the broader structure remains intact.

On the daily chart, the Bank Nifty has formed a bearish candle with a lower shadow, suggesting minor weakness along with buying support at lower levels.

On the downside, the 60,800–60,700 zone is likely to act as immediate support, said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.

According to him, immediate resistance is placed in the 61,400–61,500 zone. Any sustainable move above this zone could result in the Bank Nifty extending its up move towards 62,000, followed by 62,500 in the short term, he said.