The Nifty 50, as expected, fell sharply by 1.5 percent on April 1, confirming the previous day's Tweezer Top formation (a bearish reversal pattern) as traders remained cautious ahead of the anticipated US reciprocal tariff announcement by Trump, scheduled for April 2. The VIX jumped to a three-week high.
Hence, the index is expected to consolidate further, although the overall trend remains positive as long as the index defends the 22,900 level (the key support zone, which coincides with the 50 percent Fibonacci retracement of the March low to high). In the upcoming session, 23,100-23,000 is likely to act as the immediate support zone. However, on the higher side, 23,650 remains the key hurdle area, according to experts.
The Nifty 50 opened lower at 23,341 and rebounded sharply to 23,565 in the morning. However, after the initial hour of trade, it gradually lost those gains and finished at 23,166, down by 354 points. The index formed a bearish candlestick pattern with a long upper shadow on the daily charts, signaling selling pressure at higher levels.
On the daily charts, "we can observe that the Nifty is now approaching the 23,100 support level, which coincides with the 40-day exponential moving average. Because of the sharp decline, the structure has become weak, and hence, we change our outlook on the Nifty to sideways," said Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan.
According to him, the range of consolidation is likely to be between 23,000 and 23,650. On the upside, 23,400-23,450 will act as an immediate hurdle from a short-term perspective, he added.
The weekly options data indicated that in the near term, the index is likely to trade in the range of 22,500-23,500 levels.
On the Call side, the maximum open interest was seen at the 23,500 strike, followed by the 24,000 and 23,600 strikes, with the maximum Call writing at the 23,500 strike, and then at the 23,300-23,400 strikes. On the Put side, the 22,500 strike holds the maximum open interest, followed by the 23,000 and 22,800 strikes, with the maximum writing at the 23,200 strike, followed by the 22,800 and 23,000 strikes.
Bank Nifty
The Bank Nifty was also under pressure, falling 737 points (1.43 percent) to 50,828 with above-average volumes and forming a bearish candle with a long upper shadow on the daily charts.
"While the overall structure remains bullish, the index is likely to test the key support at 50,640, which aligns with the overlapping defense of the current bullish leg," said Anshul Jain, Head of Research at Lakshmishree Investments.
According to him, a bullish rejection around 50,640 would offer a buying opportunity, whereas a sustained breach below 50,600 could lead to further downside toward 50,100.
Meanwhile, the India VIX, the fear index, spiked sharply by 8.37 percent to 13.78, climbing above short-term moving averages (5, 10, and 20-day EMAs) and reaching its highest level since March 11. This made the bulls cautious.
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