Nifty’s Downtrend Deepens: Failure Near 200-DEMA Keeps Sell-on-Rise Bias Intact

Market Recap

The Nifty 50 index remained under sustained selling pressure throughout the week, showing no meaningful signs of recovery and ending on a decisively weak note. The index formed a bearish Marubozu candlestick on the weekly chart, clearly reflecting strong bearish control and persistent supply at higher levels.

Structurally, Nifty continues to exhibit a lower top–lower bottom formation, reinforcing the prevailing downtrend. Notably, the index has now marked its 13th consecutive trading session without closing above the previous day’s high, highlighting the absence of sustained buying interest and the dominance of sellers.

Although Nifty is currently hovering near its 200-day Exponential Moving Average (200-DEMA) and the key psychological support of 25,000, its inability to attract follow-through buying at these levels is a cause for concern. Recent rebound attempts have consistently been sold into, with every minor pullback inviting fresh short positions—clearly signalling a sell-on-rise market structure.

At present, the index remains confined within a broader 25,500–25,000 trading range. Unless Nifty decisively sustains above 25,500, which coincides with the 10-day EMA and a key swing high, selling pressure is likely to re-emerge on any rally.

Friday’s session further underscored the weakness. The short-covering witnessed over the prior two sessions was completely unwound as heavy, broad-based selling resurfaced. Several heavyweight stocks witnessed structural breakdowns, dragging the index sharply lower. Nifty ended the session down 241.25 points at 25,048.65, reinforcing expectations of elevated volatility in the near term.

Technical View

From a technical standpoint, downside pressure remains firmly intact. The index has struggled repeatedly to hold above its 200-DEMA, despite trading in near-oversold territory. These repeated failures during pullback attempts clearly confirm that rallies continue to attract aggressive selling.

The 25,500–25,600 zone, which previously acted as a strong demand area, has now turned into a crucial supply zone. Any upside move toward this region is likely to face stiff resistance unless supported by strong volumes and follow-through buying.

On the downside, the 25,100–25,000 band, aligned with the 200-day EMA, emerges as a critical make-or-break support zone. A decisive breakdown below 25,000 could accelerate selling pressure and open the door for a deeper correction.

Momentum indicators continue to warrant caution. The Relative Strength Index (RSI) is hovering near the 30 mark, reflecting extremely weak momentum, though close to oversold conditions. While intermittent short-covering bounces cannot be ruled out, any recovery is at risk of turning into a bull trap unless Nifty reclaims and sustains above key resistance levels.

Derivatives Snapshot

The derivatives data mirrors the bearish undertone visible on the charts:

• Call writers have aggressively added fresh positions at at-the-money and nearby strikes, effectively capping near-term upside.
  
  
• Put writers have shifted positions to lower strikes, indicating expectations of a bearish-to-range-bound market.
  

A significant open interest build-up of around 1.44 crore contracts at the 25,300 call strike marks this level as a strong resistance. Meanwhile, the addition of nearly 97.47 lakh put contracts at the 25,000 strike reinforces this zone as an important immediate support.

The Put–Call Ratio (PCR) has slipped sharply to 0.58 from 0.78, highlighting heightened caution and continued dominance of call writers—another clear sign of bearish sentiment.

Market Outlook

Nifty has decisively engulfed the short-covering pullback of the past two sessions and closed the week with a strongly bearish tone. The formation of a weekly bearish Marubozu candle confirms that the index remains entrenched in a downtrend.

Despite being near oversold territory, sustained buying interest remains elusive, and every intraday recovery continues to face fresh selling pressure. Trading below key short- and medium-term moving averages, coupled with repeated failures near the 200-DEMA, underscores the fragility of the current setup.

The near-term trading range is clearly defined:

• Resistance: 25,500–25,600
  
  
• Support: 25,100–25,000
  

The 25,000 level assumes added significance due to the confluence of technical and derivatives-based support. A decisive breakdown below this zone could trigger a deeper correction toward 24,500. On the upside, any meaningful improvement in sentiment is likely only if the index sustains decisively above 25,500.

Until such confirmation emerges, the broader outlook remains cautious, with sell-on-rise strategies expected to dominate. Traders are advised to remain selective, disciplined, and risk-conscious in the current environment.