Technical View: Support trendline breakout can bring selling pressure in Nifty 50, Bank Nifty closes at 7-month low

Nifty Downtrend

The Nifty 50 maintained its downward journey and remained below the 200-day EMA (Exponential Moving Average) of 23,700 for another session on January 9 amid caution ahead of TCS earnings which were in line with analysts’ expectations. However, it continued to defend the upward sloping support trendline, which joins the previous November and December lows, coinciding with the 23,500 level. As long as the index holds this level, the chances of a rebound towards the 23,700-24,000 zone look high. However, a decisive fall below this level could drag the index down towards the November low of 23,263, experts said.

The Nifty 50 remained in negative territory throughout the session and finished at 23,527, down 162 points. It formed a bearish candlestick pattern on the daily charts with above-average volumes. The index sustained below all key moving averages, and the negative bias in the momentum indicators indicated overall weakness.

"The zone of 23,550 – 23,500 will act as a make-or-break zone for the Nifty. A breach below this zone can lead to a decline towards the 23,263 level (November 2023 low), and below that, towards the psychological level of 23,000," said Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan.

On the upside, according to him, the key hourly moving averages placed at 23,631 – 23,702 will act as immediate hurdles.

As per the weekly derivative data, the maximum Call open interest was seen at the 24,500 strike, followed by the 24,000 and 23,800 strikes, with maximum Call writing at the 24,500 strike, followed by the 23,800 and 24,000 strikes. On the Put side, the 23,000 strike holds the maximum open interest, followed by the 23,500 and 23,600 strikes, with maximum writing at the 23,000 strike, followed by the 23,600 and 22,700 strikes.

The above options data indicated that the index is likely to remain in the range of 23,000-24,000, with immediate support at 23,500 and resistance at 23,800.

Bank Nifty

The Bank Nifty also extended its downtrend for another session, correcting more than the benchmark Nifty 50. It fell by 332 points to 49,504, the lowest closing level since June 6, 2024. The index decisively closed below its August low and traded well below all key moving averages, while the 10-day EMA is on the verge of falling below the 200-day EMA, indicating bearish sentiment.

The banking index has seen a correction of 2,100 points since last Friday. "As long as it holds below the 49,750 zone, weakness could be seen towards 49,250, and then 48,750 levels. On the upside, resistance is seen at 49,750, followed by 50,000 levels," said Chandan Taparia, Senior Vice President and Head of Technical Research and Derivatives at Motilal Oswal Financial Services.

The India VIX, the volatility index, continued to maintain caution among bull traders, rising 1.33% to a level of 14.66. The VIX needs to sustain below the 14 mark for the bulls to regain strength.