Nifty Stuck in Range; 24,500 Support Under Scrutiny as Volatility Rises Ahead of RBI Policy

The Nifty 50 index starts August on a cautious note, posting a fifth consecutive week of losses. Although oversold readings spark minor intraday bounces, the overall structure stays weak, with no convincing close above key resistance.

On Monday, the index ended 73.20 points lower at 24,649.55, precariously holding above the crucial 24,500 support zone. With the Reserve Bank of India’s monetary policy decision set to be announced on Tuesday, market participants remain on edge, awaiting clarity on the next directional move.

Technical View: Rangebound With Bearish Undertone

Nifty has traded in a narrow 24,500–24,750 consolidation band for several sessions. Price action is volatile and indecisive, with the bias tilting to the downside.

• The 100-day Exponential Moving Average (EMA)—a technical indicator that smooths out price data by giving more weight to recent prices near 24,590—has so far offered support. However, a decisive fall below the 24,535–24,500 zone could open the door for further declines toward 24,300–24,250.
  
  

• On the upside, the 10-Day Exponential Moving Average (10-DEMA) at 24,800 and 20-Day Exponential Moving Average (20-DEMA) at 24,900 are acting as immediate resistance levels. Unless the index closes decisively above 24,900, any price rebound is likely to face selling pressure at these points.
  
  

• The Relative Strength Index (RSI)—a technical indicator that measures momentum and signals if an asset is overbought or oversold—remains near the 40 level, suggesting persistent bearish momentum and a lack of strong buying activity.

• Price structure remains fragile, and without a positive trigger (like RBI guidance or FPI buying), a sustained rally is unlikely.

“Unless the index reclaims its moving averages with strong volumes, every rebound could be a shorting opportunity.”

Derivatives Snapshot: Caution Builds, Bearish Positioning Firm

F&O data underscores the defensive mood among traders, with option writers aggressively hedging for a lack of upside.

• Heavy call writing at the 25,000 strike price (1.33 crore contracts in open interest, or OI) creates a strong ceiling for the index, as traders are betting that the index will not rise above this level.
  
  

• The highest put open interest is at the 24,600 strike price (97.30 lakh contracts), establishing this level as immediate support, because traders have the most bets at this price that the index will not fall below it.
  
  

• However, put writers—traders betting the index will stay above certain strike prices—are shifting to lower strikes. This reflects waning confidence among those believing in a market rise.
  
  

• The Put-Call Ratio (PCR)—a measure comparing the volume of put options to call options—has dropped to 0.72, further confirming bearish sentiment and limited expectations for upward movement.

This data shows overhead resistance is firm. Without prompt short covering, the path of least resistance is down.

Volatility Watch: VIX Remains Tame Despite Macro Event

Despite the upcoming RBI policy decision, the India Volatility Index (VIX)—which measures market expectations of near-term volatility—fell 2.13% to 11.97, staying comfortably below the 13 mark. This suggests traders expect sideways movements or only mild declines, rather than a sharp move down.

This low volatility may also imply that any surprise in RBI commentary (especially on inflation or liquidity measures) could lead to an outsized reaction, given the current complacency.

Market Outlook: Sideways Bias, But Sell-on-Rise Prevails

Sentiment continues to favor selling on rises. Buyer participatin is low, lacking institutional support to drive momentum. Ongoing call writer dominance, put writer migration, and a weak RSI all reflect distribution, not accumulation.

Key Triggers to Watch:

• RBI Monetary Policy: Any dovish surprise could spark short-term covering.
  
  

• FPI Activity: Their net positioning remains bearish; a shift in futures or cash-market flows may alter the trajectory.
  
  

• Global Cues: U.S. inflation data and bond yields remain on the radar.

Final Takeaway

Nifty remains in limbo, struggling for direction amid weakening strength and cautious derivatives positioning. Without a break above 24,900 or below 24,500, continued choppiness is likely.

Patience and discipline are essential now. Shorting near resistance offers better risk-reward than chasing rebounds in this environment.