Market Meltdown: Nifty Outlook Turns Bearish as Support Levels Break
On Thursday, the benchmark indices corrected sharply. The Nifty ended 253 points lower, while the Sensex was down by 823 points. Among sectors, all the major sectoral indices witnessed profit booking at higher levels, but the Capital Market index lost the most, shedding over 3%.
Technical Breakdown
Technically, the market breached the crucial support level of 25,000 / 82,000. Post-breakdown, selling pressure intensified. On daily charts, it has formed a long bearish candle, which supports further weakness from the current levels.
We are of the view that as long as the market is trading below 24,920 / 81,800, a weak sentiment is likely to continue. On the downside, it could slip to 24,650 / 81,000. Further declines may also continue, potentially dragging the market down to 24,550 / 80,700. The current market texture is volatile; hence, level-based trading would be the ideal strategy for day traders.
Derivatives Recap
Market Recap
After a flat start, Nifty came under selling pressure and traded with a negative bias in the first half. The pressure intensified in the latter half, resulting in a sharp decline and a loss of 1.01%. The Nifty Midcap 100 underperformed the Nifty 50, closing with a deeper loss of 1.60%.
Options Market Insights
| Metric | Value |
|---|---|
Significant Call side OI | 25,200 Call |
Significant Put side OI | 24,500 Put |
Put-Call Ratio (PCR) | 0.666 |
Max Pain | 25,000 |
VWAP Range | 24,760 – 25,100 |
Sentiment | Higher Call writing vs. Put writing → Bearish Undertone |
Index Futures Positioning
-
Nifty Futures: -8,309 contracts
-
BankNifty Futures: -3,768 contracts
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MidcapNifty Futures: -837 contracts
-
FinNifty Futures: -12 contracts
-
NiftyNext50 Futures: -3 contracts
Conclusion
The market’s sharp correction, breach of key support levels, and the formation of a bearish candle on the daily chart indicate continued weakness. With all major sectoral indices witnessing profit booking and bearish sentiment evident in derivatives positioning and options data, the near-term outlook remains cautious. As long as the Nifty trades below 24,920 and the Sensex below 81,800, a weak trend is likely to persist. In such a volatile environment, level-based trading remains the most prudent approach for day traders.
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