Nifty Weakens Further as Volatility Spikes; Banking Stocks Extend Decline

Market Overview

Indian equity markets witnessed a sharp sell-off as volatility surged and risk sentiment weakened. The Nifty 50 closed at 24,480.50, down 1.55%, extending the recent corrective trend and slipping below the August 8, 2025 low of 24,337, signalling that the ongoing correction is now testing a key historical support zone.

Selling pressure remained persistent throughout the session, with most sectors ending in the red and market breadth staying weak. The advance–decline ratio also favoured declines, highlighting broad-based weakness across the market.

Volatility spiked sharply during the session, with India VIX jumping 23.41% to 21.14, indicating heightened nervousness among market participants and the possibility of wider price swings in the near term.

Nifty Technical Analysis: Momentum Turns Bearish

From a technical perspective, the daily candle reflects continuous selling pressure through the session. The index remains below the Supertrend resistance, indicating that the short-term trend continues to favour the bears.

Nifty is also trading well below its short-term moving averages, reinforcing the ongoing weakness in the broader structure.

Momentum indicators further confirm the negative bias:

• MACD has moved deeper into negative territory, with the histogram expanding on the downside.
• RSI has slipped toward the 30 zone, suggesting that selling momentum has accelerated in recent sessions.

Although oversold readings may lead to short-term pullbacks, the broader structure remains fragile unless the index reclaims key resistance levels.

Key Levels for Nifty

• Support: Immediate support is placed near 24,250. A break below this level could push the index toward 24,100.
• Resistance: The 24,800–24,900 zone is likely to act as a strong resistance band.

Unless Nifty reclaims this resistance zone on a closing basis, any short-term rebound is likely to face selling pressure.

Nifty Bank Outlook: Banking Index Under Pressure

The Nifty Bank index ended the session at 58,755.25, down 1.81%, extending its recent decline and slipping below the 59,000 mark. Intraday selling remained persistent and the opening gap remained unfilled, highlighting sustained bearish sentiment.

Technically, the index has fallen below its 100-day moving average, indicating a loss of strength. The index is now trading close to its 200-day moving average near 57,500, which is emerging as a crucial support level for the banking index.

Momentum indicators are also weakening:

• RSI has slipped near 36, indicating that the decline has accelerated over the past few sessions.
• On the DMI indicator, the –DI line has crossed above the +DI line, suggesting that sellers currently have the upper hand.

Sectoral indices also reflected widespread pressure within the banking space. Nifty PSU Bank declined 3.24%, while Nifty Private Bank fell 1.51%, indicating broad-based selling across public and private sector banks.

Key Levels for Nifty Bank

• Support: Immediate support is placed near 58,200–58,000. A break below this zone could extend the downside.
• Resistance: The 59,200–59,500 zone is expected to act as a strong resistance band.

Unless 59,500 is reclaimed on a closing basis, the near-term trend for Nifty Bank is likely to remain weak.

Market Outlook

Rising volatility, deteriorating momentum indicators, and breakdowns below key technical levels suggest that the short-term trend in both Nifty and Nifty Bank remains bearish. While oversold conditions could trigger temporary pullbacks, the broader market structure currently favours a sell-on-rise approach until indices stabilise above key resistance levels.