Market Recap: Budget Day Volatility Hits Sentiment
Indian equity markets witnessed sharp volatility on Budget Day, with benchmark indices reacting negatively amid the absence of immediate growth-focused triggers and lingering concerns around fiscal prudence. The Nifty 50 slipped 1.96%, shedding 495.20 points to close at 24,825.45, after trading in a wide intraday range.
The index opened firm and climbed to a day’s high of 25,440.90, but selling pressure intensified sharply in the second half, dragging Nifty to an intraday low of 24,571.75. The sharp reversal highlights nervous sentiment and a classic sell-on-news reaction following the Union Budget announcements.
Technical View: 200-DMA Breach Signals Trend Shift
From a technical perspective, the market structure has weakened decisively. Nifty continues to form a lower high–lower low pattern, signalling a short-term trend reversal. Importantly, the index has closed below its 20-day, 50-day, and 200-day moving averages, with the 200-DMA placed near 25,136.
This decisive breach of the 200-DMA marks a clear shift in bias from bullish to corrective and reflects rising distribution pressure. With this key medium-term support now violated, focus shifts to the 24,500 zone, which emerges as a crucial make-or-break level for the bulls.
- A sustained hold above 24,500 could trigger short-covering-led pullbacks
- A decisive breakdown below this level may accelerate selling pressure
On the upside, the earlier support zone of 25,400–25,500 has now turned into a strong resistance band, where selling interest is likely to emerge on pullbacks. A sustained move below 24,500 could open the door for further downside toward 24,200, followed by 23,900.
Momentum Indicators: Bears in Firm Control
Momentum indicators remain firmly tilted toward the downside. The RSI is hovering in the low-30s, well below the neutral zone, indicating strong bearish momentum and the absence of any positive divergence. This suggests that rallies are likely to be sold into, unless the index swiftly reclaims the 200-DMA and stabilises above it.
Derivatives Snapshot: Defensive Positioning Dominates
Derivatives data reinforces the cautious undertone in the market. The Put–Call Ratio (PCR) remains subdued near 0.43, clearly indicating aggressive call writing and limited confidence among put writers.
- Heavy call open interest is concentrated between 25,000–25,300, highlighting strong overhead supply
- Put writing is visible near 24,500, though positioning remains tentative, suggesting this level may be retested
- Maximum pain is placed near 25,000, indicating continued discomfort for long positions unless short covering picks up
Volatility Check: VIX Spikes, Risk Perception Rises
Volatility indicators point to rising uncertainty. India VIX jumped over 10% to around 15, reflecting heightened risk perception among market participants. Historically, such spikes in volatility tend to be associated with choppy to negative market behaviour, rather than an immediate directional recovery.
Market Outlook: Cautious and Volatile Near Term
Looking ahead, the near-term outlook remains cautious and volatile. As long as Nifty trades below 25,400, rallies are likely to face selling pressure. A sustained hold above 24,500 is critical to prevent further downside acceleration.
Any recovery in the coming sessions is expected to be short-covering driven, rather than supported by fresh long build-up, until there is visible improvement in price structure, momentum indicators, and derivatives positioning.
Budget Perspective: Sell-on-News, Not Structural Damage
From a Budget standpoint, while the government reiterated its commitment to fiscal discipline, infrastructure-led capex, and long-term growth visibility, the absence of immediate consumption-boosting or sector-specific incentives triggered a sell-on-news reaction. Markets appear to be recalibrating expectations, rather than pricing in any structural deterioration.
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