Volatility Rises: Nifty Drifts Lower, Nifty Bank Loses Leadership

Market Overview

Indian equity markets remained under pressure as rising volatility weighed on sentiment, with both benchmark indices extending their corrective phase. Nifty slipped 0.30% to close at 25,157.50, while Nifty Bank underperformed, falling 1.02% to 58,800.30, signalling a loss of leadership from banking stocks. The overall price action reflects growing uncertainty after the recent sharp sell-off, with traders adopting a cautious, sell-on-rise approach.

Nifty Technical Analysis: Volatility High, Trend Still Weak

Nifty formed a long-legged doji on the daily chart, highlighting heightened intraday volatility and indecision following the previous session’s sharp decline. This candle structure suggests active participation from both buyers and sellers, but with no clear dominance yet.

From a trend perspective, the index has decisively broken below its rising trendline, indicating a breakdown of the prior short-term structure. However, Nifty managed to close marginally above the VWAP near 25,125, offering temporary intraday support. Despite this, the broader setup remains weak, as the index continues to trade below its 20-day and 50-day moving averages, keeping the short-term bias negative.

Momentum indicators reinforce the cautious tone. The daily RSI has slipped into the 27–28 zone, reflecting oversold conditions but without any meaningful bullish divergence or reversal signal so far. The MACD remains firmly in negative territory, with a deepening histogram indicating that downside momentum is still dominant.

On the hourly chart, Nifty continues to form a sequence of lower highs and lower lows, confirming that the corrective trend remains intact. Minor intraday pullbacks have failed to attract sustained buying interest, making recovery attempts short-lived.

Key Levels for Nifty

• Support: The 25,000 zone remains a critical near-term support. A decisive break below this level could open the door for further downside.
• Resistance: The 25,340–25,400 zone stands out as an immediate resistance band. Any bounce toward this area is likely to face selling pressure.

Until Nifty reclaims key moving averages and shows follow-through buying, the near-term outlook remains cautious, although mean reversion-driven pullbacks cannot be ruled out given the oversold conditions.

Nifty Bank Outlook: Corrective Phase Deepens

Nifty Bank witnessed sharper selling pressure and closed at 58,800.30, down 1.02%, after failing to sustain near recent highs. The daily chart printed a strong bearish candle, reflecting aggressive selling and distribution at higher levels. More importantly, the index has slipped decisively below the daily Supertrend, signalling a shift in the short-term trend from bullish to corrective.

Technically, Nifty Bank has also broken below the 23.6% Fibonacci retracement level near 58,815 and is now hovering closer to the 38.2% retracement around 57,800, pointing to a deeper retracement of the prior up-move. The breakdown below the rising trendline further confirms exhaustion in the earlier bullish momentum.

Momentum indicators have weakened meaningfully. The daily RSI has slipped toward the 40–41 zone, indicating loss of strength, while the MACD remains negative, suggesting that downside pressure has not yet stabilised.

Sectoral participation also reflects broad-based weakness, with the Nifty Private Bank index declining 0.85% and the Nifty PSU Bank index falling 1.01%, underscoring that selling pressure is widespread across the banking space rather than stock-specific.

Key Levels for Nifty Bank

• Support: The 58,600–58,400 zone remains the immediate support area to watch. A breakdown below this band could accelerate the corrective move toward lower retracement levels.
• Resistance: The 59,000–59,300 range now acts as a strong overhead supply zone.

As long as Nifty Bank remains below its 20-period MSMA, the near-term outlook is expected to stay weak, with rallies likely to be sold into rather than chased.

Market Outlook

Overall, rising volatility, weak momentum indicators, and breakdowns below key technical levels suggest that both Nifty and Nifty Bank remain in a corrective phase. While oversold conditions may trigger intermittent pullbacks, the broader setup continues to favour caution. Traders are advised to remain selective, focus on risk management, and await clearer confirmation of trend stabilisation before positioning aggressively.