The carnage continued in the equity markets with the Nifty 50 falling nearly 1 percent on September 26, following a fresh wave of tariffs targeting the pharma sector by Donald Trump. The index almost shed 78.6 percent of its recent rally (from the August 29 low to the September 18 high) and nearly tested the 24,600 target, declining more than 3 percent in the last six consecutive sessions.
The index dropped decisively below the 100-day EMA and is now around 250 points away from its 200-day EMA (24,400), which also coincides with the low of the recent rally (August 29). If the index breaks this level, bears may tighten their grip further. However, on the higher side, the 24,800-24,900 range may act as an immediate hurdle, according to experts.
The rising India VIX also made the bulls uncomfortable, as it touched the 50-day EMA and stayed well above short-term moving averages (10-day and 20-day EMAs), rising 5.96 percent to the 11.43 zone. It rallied 14.62 percent during the week.
The momentum indicators are also favouring the bears, with the RSI falling to 39.31, while the MACD maintained a negative crossover, with the histogram weakening further.
The Nifty 50 opened lower at 24,819 and remained under bears' control throughout the session. The index hit an intraday low of 24,629 in the last hour of trade before closing at 24,655, down 236 points (0.95 percent) and forming a long bearish candle on the daily timeframe, continuing the lower high-lower low structure for the sixth straight day.
This indicates a decisive breakdown of crucial supports around the 25,000-24,900 levels. This is not a good sign and signals more weakness in the short term, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
The index formed a long bearish candle on the weekly charts, losing 2.65 percent after three weeks of gains, indicating a possibility of faster downside retracement in the market.
According to Nagaraj, the market is now sliding down to the next important support of around 24,400-24,300 (previous swing lows and 200-day EMA) by next week. Immediate resistance is placed at the 24,850 level, he added.
The monthly options data indicated that the Nifty may trade in the 24,500-25,000 range in the short term.
The maximum Put open interest was observed at the 24,500 strike, followed by the 24,600 and 24,000 strikes, with the maximum Put writing at the 24,500, 24,600, and 24,650 strikes. Meanwhile, the 25,000 strike holds the maximum Call open interest, followed by the 25,100 and 24,800 strikes, with the maximum Call writing at the 24,800, 24,900, and 24,700 strikes.
Bank Nifty
The Bank Nifty also participated in the correction, plummeting 587 points (1.07 percent) to 54,389, wiping out more than 50 percent of its recent rally. The index formed a long bearish candle after a negative opening and is now 600 points away from its 200-day EMA (53,785).
For the week, the banking index declined 1.93 percent and snapped its three-week winning streak, forming a long red candle on the weekly scale.
The index faced resistance around the midline of the Bollinger Bands (55,600-55,650) during the week, where the price pulled back from the lower band up to the midline before falling again, highlighting the dominance of sellers.
The ADX has been falling, which indicates weakening trend strength and a possible reduction in market momentum, suggesting that the current move may lose steam. Overall, Bank Nifty’s price action signals bearish control, with critical resistances holding firm at key technical levels.
"The 54,100–54,000 zone will act as crucial support for the index. If the index slips below the 54,000 level, it will lead to further correction, up to the 53,500 level," said Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities. He added that on the upside, the 100-day EMA zone of 54,900-55,000 will act as crucial resistance for the index.
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