Nifty’s support is 'crumbling'—why traders are bracing for a potential market slide.

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The Nifty 50 remained under bears' control for most of Friday’s session, ending October 23 down 0.4 percent. The decline took its weekly losses to 2.36 percent, with selling pressure persisting throughout the four trading sessions of the week. Weakening bullish momentum, the index’s sustained position below short-term moving averages, a rise in India VIX to the 17 mark, and surging crude oil prices towards $115 a barrel strengthened the bears' case.

The possibility of the Nifty 50 extending its decline towards the 22,400–22,350 zone, which coincides with the 200-week EMA, followed by 22,180, the current month’s low, cannot be ruled out in the upcoming monthly F&O expiry week. A decisive break below 22,180 could intensify selling pressure. On the upside, however, any recovery is likely to encounter selling pressure, with 23,200 emerging as a key resistance level. A sustained move above this level could improve the prospects of a renewed uptrend. In the immediate term, the 22,800–22,850 zone, which coincides with the 20-day EMA, is likely to act as resistance, according to market experts.

The Nifty 50 opened higher and climbed to an intraday high of 22,787 but failed to sustain its initial gains. The index extended its decline as the session progressed, hitting an intraday low of 22,372 in the second half before recovering partially to close at 22,600, down 88 points, or 0.39 percent, on Friday.

On the daily chart, the index formed a sizeable bearish candle with a long lower shadow following a Doji in the previous session. This indicates continued selling pressure, although buying interest emerged at lower levels.

Technically, the index remained below all key moving averages, which were trending downwards. The Relative Strength Index (RSI) fell to 42.38, moving closer to its signal line. Meanwhile, the Moving Average Convergence Divergence (MACD) edged lower but remained above its signal line, while the histogram continued to contract for the third consecutive session. Together, these signals point to weakening momentum and a bearish near-term bias, although the MACD has yet to confirm a fresh bearish crossover.

On the weekly chart, the index formed a long bearish candle with a lower wick, contrasting with the long bullish candle of the previous week. The Nifty 50 has also remained below its 10-, 20-, 50- and 100-week EMAs for several weeks, although it continues to defend the 200-week EMA on a closing basis. These developments highlight the deterioration in the short-term technical structure, with the 200-week EMA emerging as a crucial support level.

"The overall negative chart pattern and inability to sustain the opening gains signals negative outlook for Nifty for the short term in the coming sessions," Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said.

According to him, the next lower support levels to watch are around 22,300–22,200, while any recovery could encounter strong overhead resistance near 22,800.

Market breadth remained weak, with sharp declines across broader-market segments, including microcap, midcap and smallcap stocks, on Friday. The underperformance of these segments relative to the benchmark index points to broader selling pressure and heightened near-term risk.

Monthly options data continued to identify the 22,500 strike, where the maximum Put open interest is concentrated, as an important immediate support for the index. On the upside, the 23,000 strike, which has the highest Call open interest, is likely to act as a key resistance. The 22,800 and 22,700 strikes, which have the next-highest Call open interest concentrations, could pose additional hurdles to any recovery.

Meanwhile, India VIX, the market's fear gauge, extended its upward trajectory, rising 6.96 percent on Friday to close at 16.86, its highest closing level since June 8. The rise in volatility signals growing uncertainty and discomfort among bullish investors. A further move above 18 next week could increase the risk associated with bullish positions and potentially amplify market swings.

Bank Nifty: 53,800–53,700 support zone in focus

The Bank Nifty remained under pressure for the fourth consecutive session, underperforming the benchmark Nifty 50. The banking index plunged 638 points, or 1.16 percent, to close at 54,287 on Friday, taking its weekly decline to 2.79 percent, or 1,557 points.

On the daily chart, the Bank Nifty formed a long bearish candle with a lower wick, indicating persistent selling pressure despite some buying interest at lower levels. The index traded below all key moving averages and was around 500 points above its September 29 low of 53,786, underscoring the prevailing weakness in its underlying trend.

The RSI fell below 40 and registered a bearish crossover, while the MACD approached a bearish crossover. The green histogram bar also contracted for the fourth consecutive session, signalling fading bullish momentum and reinforcing the cautious near-term outlook for the banking index.

"Going ahead, the 53,800–53,700 zone is likely to act as an important support area for the index. A sustained breach below this zone may invite further selling pressure," Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities, said.

On the upside, the 54,900–55,000 zone is expected to act as a crucial resistance, he added.