Technical View: Nifty sheds 1,000 points from recent swing high, bears may gain more strength if index breaks 22,800

Nifty Under Pressure

The Nifty recorded a sharp sell-off with broad-based weakness on April 4, extending losses for another session and breaking the 50 percent Fibonacci retracement (from the March low to high at 22,917), which indicates the control of bears over the market. The higher-than-anticipated US tariffs and fear of retaliatory measures against the US weighed on market sentiment.

According to experts, if the index sustains below 22,917, 22,800 is the immediate support, followed by 22,700 (61.8% retracement), which is the next key support zone. However, if the index rebounds, 23,000-23,200 is the zone to watch.

The Nifty 50 opened lower at 23,190 and remained under pressure throughout the session. It touched an intraday low of 22,857 in late trade before closing the session at 22,904, down 346 points (1.49 percent).

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the daily chart’s pattern indicates selling momentum after the formation of a double-top pattern around 23,800 levels.

The index shed 1,000 points from its recent swing high. For the week, it plunged 2.61 percent, marking its biggest loss since the last week of February, and formed a bearish candle with an upper shadow on the weekly timeframe after the Doji-like candle formation in the previous week, signaling pressure at higher levels.

"We observe a negative reversal pattern in the last three weekly candles. Hence, more weakness could be in store," he said.

Therefore, he is of the view that the short-term trend of the Nifty remains weak, and the downward correction seems to have gained momentum. "Further weakness below 22,800 levels could cause the Nifty to slide to the next lower trajectory of around 22,350 in the near term. Any pullback rally from here could face resistance around 23,150 levels," he added.

The weekly options data suggested that the near-term trading range for the Nifty 50 may be between the 22,500-23,200 zone, as breaking this range on either side could give the index a firm direction.

On the Call side, the 23,200 strike holds the maximum open interest, followed by the 23,000 and 23,500 strikes, with the maximum Call writing at the 23,000 strike, followed by the 23,200 and 23,100 strikes. On the Put side, the maximum open interest was seen at the 22,500 strike, followed by the 22,800 and 22,900 strikes, with the maximum writing at the 22,500 strike, followed by the 22,900 and 22,700 strikes.

Bank Nifty

The Bank Nifty maintained its outperformance compared to the benchmark Nifty 50, falling 95 points to 51,503 and forming a bearish candlestick pattern with both upper and lower shadows on the daily charts, indicating volatility. During the week, it was down just 0.12 percent and formed a green candle with long upper and lower wicks on the weekly scale.

"Bank Nifty is holding strong at the 51,400-51,350 support zone. A breach below this range could trigger further downside toward 50,640," said Anshul Jain, Head of Research at Lakshmishree Investments.

On the upside, according to him, resistance is placed at 51,750, and a breakout above this level could drive the index toward 52,050. The structure remains bullish as long as key support levels hold, making dips a potential buying opportunity, he believes.

Meanwhile, the India VIX still sustained above short-term moving averages (5, 10, and 20-day EMAs) as well as above the midline of Bollinger Bands, signaling caution for bulls. It was up by 1.14 percent at 13.76, after a two-day fall.