Dalal Street week ahead: Nifty’s next big move hinges on support test; Volatility is set to remain high

Markets remained under constant pressure and trended lower during the week, ending on a negative note. After initially attempting a mild recovery, the Nifty faced a sell-off at higher levels and gradually turned lower. It traded in a relatively wide range of 788 points, oscillating between 24,601.70 and 23,813.65. Volatility increased significantly, with the India VIX rising 14.57% to 19.71, reflecting heightened panic among market participants. The headline index finally ended the week with a net loss of 455.60 points (-1.87%).

The broader technical framework shows that the Nifty has slipped back into a corrective phase after failing to sustain above its recent resistance zone. The index has moved below its short-term moving average and is currently hovering near an important support region around the 23,800 zone.

This area now becomes critical; Any sustained breach could open the door to an extended decline. On the upside, the zone near 24,400-24,500 has started to act as a supply area. The market is no longer in a trending phase but appears to be sliding into a broad consolidation with a negative bias. A decisive move above 24,500 could only revive strength, while a break below 23,800 could accelerate weakness.

Given the current setup and a truncated trading week due to the Maharashtra Day holiday on Friday, the markets may open cautiously. Immediate resistance levels are seen at 24,200 and 24,450, while support is placed at 23,700 and 23,500.

The weekly RSI remains at 43.10, which is neutral but bearish, and shows no divergence against price. MACD remains below its signal line, continuing to remain in negative territory, indicating weak momentum. From a pattern perspective, the Nifty appears to be in a very wide trading range but below two of the three key moving averages. The index is trading below its 50-week moving average (~25,041) and struggling near the 100-week MA (~24,512), both of which now act as overhead resistance. The longer-term 200-week moving average remains very low, indicating that while the primary trend is intact, the intermediate trend is under stress.

Looking ahead, market participants should adopt a cautious and defensive approach. Fresh aggressive buying should be avoided unless the index shows signs of stabilizing above key resistance levels. Capital preservation and selective stock-specific trading should be prioritized over broad-based exposure. Traders must remain agile, respect stop losses and avoid excessive leverage in the volatile and range-bound environment that is shaping up.

The relative rotation graph (RRG) shows that there has been no major change in the sectoral setup. Nifty Energy, Midcap 100, Infrastructure, PSE, Pharma and Metal indices are within the leading quadrant. While some are slowing down on their relative

Velocity, these groups can be relatively ahead of the broader markets.

Nifty PSU Bank, BankNifty, Auto and Financial Services indices are placed in the weaker quadrant. Their relative performance is expected to weaken in the coming days.

The Nifty IT index has consistently declined within the lagging quadrant along with the Nifty Services sector index. The Nifty Realty Index, which is also within the lagging quadrant, continues to show a sharp improvement in its relative momentum against the broader Nifty 500 Index.

FMCG and media indices are placed within the improving quadrant.

Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and Founder of EquityResearch.asia and ChartWizard.ae is based in Vadodara. He can be contacted at milan.vaishnav@equityresearch.asia