Nifty 50 Reverses Half of April Gains Amid Rising VIX; Key Levels to Watch

Market Turmoil Continues as Nifty 50 Falls 1.83 Percent

The Nifty 50 plummeted nearly 2 percent on May 12, extending its downward journey for the fourth straight session. The index witnessed its biggest single-day fall since the start of April and lost more than 50 percent of its April rally during the recent correction, indicating that bears are gaining strength. The index also entered the long bullish gap formed on April 8 (23,150–23,800).

If the index sustains below 23,400, the 50 percent Fibonacci retracement level of the April rally, a fall toward 23,150–23,000 cannot be ruled out in the upcoming sessions. However, in the event of a bounce, 23,500–23,600 is expected to act as immediate resistance, according to experts.

Rupee Hits Fresh Record Low

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The rupee weakened for the third consecutive session and hit a fresh record low of 95.74 against the US dollar amid rising crude oil prices linked to escalating tensions in West Asia, along with FII outflows. The selling pressure was broad-based, with the Nifty IT and Realty indices leading the decline, each losing around 4 percent.

Nifty 50 Falls to Lowest Closing Level Since April 7

The Nifty 50 started trading on a negative note and extended its downtrend as the day progressed. The index hit an intraday low of 23,348 before closing the bear-driven session at 23,380, the lowest closing level since April 7, down 436 points (1.83 percent), marking the biggest single-day fall since March 30.

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Technical Indicators Suggest Bearish Control

On the daily timeframe, the index formed a long bearish candle and continued its lower high-lower low structure for the third consecutive session, signalling strong bearish control. The index remained below all key moving averages, all of which were trending downward. Meanwhile, the RSI dipped below 40 to 39.86, while the MACD maintained a bearish crossover with further expansion in the red histogram bars, adding more strength to the bears.

Additionally, the fast stochastic line remains below the slow stochastic line, reinforcing the negative bias and suggesting that momentum continues to favour the bears.

Expert Analysis

According to Rupak De, Nifty has further broken away from its recent consolidation range, indicating rising weakness in the trend. Overall sentiment appears extremely bearish, with the potential to drag the index towards 23,200–23,150 in the near term, from where a meaningful recovery might emerge. On the higher side, resistance is placed at 23,600, above which sentiment might improve.

Weekly Options Data Suggests Key Support and Resistance Levels

The weekly options data suggests that 23,000 is expected to be a key support level going forward, where the maximum Put open interest is placed, while 23,500 is likely to be a key hurdle, as it holds the highest Call open interest in the immediate term. Overall, the broader trading range could remain between 23,000 and 24,000, with a decisive move on either side likely to signal a firm direction.

India VIX Surges to 19.28

Meanwhile, the India VIX, the fear gauge, extended its upward journey for the third consecutive session and surged 3.92 percent to 19.28 on Tuesday, signalling rising discomfort among bulls. Bulls may remain under pressure as long as the VIX stays above the 19 level.

Bank Nifty Trapped in Bearish Territory

The banking index also remained trapped in bearish territory and dropped below the 50 percent Fibonacci retracement level of the April rally. The Bank Nifty slipped 885 points (1.63 percent) to 53,555 and formed a long red candle on the daily charts, with all key moving averages trending downward, signalling strengthening bearish momentum.

According to Sudeep Shah, going forward, the 54,100–54,200 zone is likely to act as a significant resistance area for the index. As long as Bank Nifty remains below the 54,200 level, the prevailing downtrend is expected to continue, with the index likely to drift towards 53,000 in the near term, followed by a potential decline towards the 52,500 level.