Bears May Target Lower Levels if Nifty Breaks Below Monday's Low, Key Support Zones in Focus

Market Sentiment Dampened by Renewed Gulf Tensions and Energy Conserve Appeal

The Nifty 50 remained under pressure for a third consecutive session, falling 1.5 percent after a gap-down opening on May 11, marking a disappointing start to the week. The market's weakness was signaled by a decisive fall below the support levels of the 20-day EMA and the 23.6 percent Fibonacci retracement of the April rally, both placed around the 24,040 level. The short-term moving averages trended downward, and the momentum indicators turned bearish, further confirming weakening momentum.

Renewed Gulf tensions following Donald Trump's rejection of Iran's response to the US peace proposal dampened market sentiment. The cautious mood deepened after the Prime Minister's appeal to conserve energy and avoid non-essential foreign travel, prompting investors to reassess the economic impact of higher crude prices, rupee weakness, and pressure on the current account deficit.

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The index closed near the lower end of the broader trading range of 23,800-24,500. If it decisively breaks and sustains below the 23,800 level, then 23,500 will be the key level to watch on the downside. On the higher side, however, the psychological 24,000 level is expected to act as immediate resistance, followed by 24,200 (near the 50-day EMA), according to experts.

The Nifty 50 opened more than 200 points lower at 23,970 and remained in a bear grip throughout the session. The index touched an intraday low of 23,799 in late trade before closing at 23,816, down 360 points (1.49 percent).

On the daily charts, the index formed a sizeable bearish candle and traded well below all key moving averages, indicating increased selling pressure. The RSI dropped to 46.11 with a negative crossover, while the MACD fell below the signal line, with the histogram turning negative for the first time since April 2.

The weekly options data suggested that the immediate trading range for the Nifty 50 could be 23,500-24,000, while 23,500-24,500 is likely to remain the broader range.

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Meanwhile, the India VIX, the market's fear gauge, spiked sharply by more than 10 percent to the 18.55 zone, signalling discomfort for bulls. In fact, the VIX soared above its short- and medium-term moving averages in a single day, indicating further weakness for bullish sentiment. A fall below the 17 mark is necessary for bulls to regain momentum.

Bank Nifty Extends Losses

The Nifty Bank also reeled under pressure and slipped below the support level of 54,500, closing 871 points (1.57 percent) lower at 54,440 and extending losses for another session. On the daily timeframe, the Bank Nifty formed a red candle after a gap-down opening and closed marginally above the 38.2 percent Fibonacci retracement level (of the correction from the February high to the April low), while still holding above the previous week's low of 54,220.

Currently, the index is trading below all its key moving averages, which are gradually sloping downward, reflecting a weakening trend. The daily RSI stands at 43.74 and continues to trend lower, suggesting fading momentum. The MACD maintained a bearish crossover below the zero line, while the histogram's red bar expanded further.

Going ahead, the zone of 54,200-54,000 is likely to act as immediate support for the index. A decisive and sustained breach below 54,000 could trigger further downside, potentially dragging the index towards the 53,400 level, according to experts.