Global Shock Triggers Sharp Sell-Off: Nifty Slips Below 26,000, Trend Turns Fragile

Indian equity markets witnessed a sharp risk-off move as the Nifty surrendered the entire gains of the previous week, slipping decisively below the crucial 26,000 mark. Renewed global uncertainty, triggered by reports of a steep 500% tariff proposal on purchases of Russian oil, rattled investor sentiment and sparked broad-based selling across sectors.

The abrupt shift in global cues pushed market participants into defensive mode, resulting in heavy supply at higher levels and a visible breakdown in the index’s short-term structure.

Market Overview: Bears Take Control

The Nifty index ended Thursday’s session firmly under selling pressure, with all major sectoral indices closing deep in the red. Intraday recoveries were consistently met with aggressive selling, highlighting strong seller dominance and a clear absence of dip-buying appetite.

The benchmark index declined 263.90 points to close at 25,876.85, marking its steepest single-day fall in the last four weeks. The decline erased the entirety of the prior week’s gains and underscored growing uncertainty in the market.

Technically, the index is now hovering near a confluence of key supports, including an upward-sloping trendline and a major Fibonacci retracement level. However, the broader structure has weakened noticeably, raising concerns over the sustainability of the ongoing uptrend.

Technical View: Breakdown Below 26,000 Raises Downside Risks

From a technical standpoint, the setup has deteriorated meaningfully. The Nifty has closed below its previous day’s high for four consecutive sessions, indicating sustained distribution and lack of bullish follow-through.

The decisive breakdown below the psychological 26,000 level has further amplified downside risks. The index has failed to sustain its earlier breakout and is now trading near a critical make-or-break zone defined by:

• The rising trendline support
• The 50% Fibonacci retracement level

Adding to the bearish undertone, the Nifty has slipped below both its 20-day and 50-day Exponential Moving Averages (DEMA). These averages are now likely to act as immediate overhead resistance, reinforcing the view that rallies are being sold into.

The 26,000–26,100 zone, which earlier acted as a strong demand area, has now turned into a formidable resistance band. As long as the index remains below this zone, the probability of follow-through selling remains elevated.

Momentum indicators also reflect weakness. The Relative Strength Index (RSI) is trading below the neutral 50 mark, indicating fading bullish momentum. While 25,850 stands out as an immediate support, a decisive break below this level could accelerate the ongoing sell-off.

Derivatives Snapshot: Options Data Signals Caution

The derivatives setup mirrors the bearish undertone seen in the cash market. Call writers have aggressively added fresh positions at at-the-money and nearby strikes, effectively capping near-term upside potential.

On the other hand, put writers have unwound positions and shifted exposure to lower strikes, suggesting expectations of limited upside and only brief, tactical pullbacks.

Key derivatives observations include:

• Heavy open interest build-up of ~92.15 lakh contracts at the 25,500 put strike, establishing it as an important near-term support
• Addition of ~1.41 crore call contracts at the 26,000 strike, reinforcing this level as a strong resistance ceiling
• Put-Call Ratio (PCR) slipping sharply to 0.50 from 0.77, reflecting rising caution and dominance of call writing

While the sharp drop in PCR places it in oversold territory—raising the possibility of minor short-covering rallies, the broader derivatives structure continues to favour sellers.

Market Outlook: Trend Turns Fragile, Sell-on-Rise Strategy Favoured

The broader trend for the Nifty has turned cautious to fragile, with the index slipping below key short- and medium-term moving averages. The failed breakout and swift erosion of recent gains have clearly dented market confidence.

The formation of lower highs, coupled with the quick absorption of intraday recoveries, points to persistent selling pressure at elevated levels. With the index closing below critical psychological support, downside risks remain pronounced.

The 25,800–25,850 zone now emerges as a crucial support band, backed by the confluence of the rising trendline and the 50% Fibonacci retracement. A decisive breakdown below this zone could open the door for a deeper correction toward the 25,700 region.

On the upside, any meaningful revival in bullish sentiment is likely only if the index manages to reclaim and sustain above the 26,100 level. Until such a move materialises, sell-on-rise is expected to remain the preferred strategy in the near term.