The Indian equity markets started the week on a weak note, with the Nifty 50 declining 0.40% to close at 25,586 on January 19. This marked the first time since October that the index fell below its 100-day exponential moving average (EMA), signaling a potential shift in market sentiment. The broader technical picture suggests increased bearish pressure, with the index now trading below most key moving averages and momentum indicators showing signs of weakness.

Technical Analysis and Key Levels

The Nifty 50's technical structure has deteriorated significantly, with the index slipping below all major moving averages except the 200-day double exponential moving average (DEMA). The index formed a bearish candle with a long lower shadow, indicating selling pressure at higher levels while showing some buying interest at lower levels.

For the Nifty 50, key resistance levels based on pivot points are positioned at 25,638, 25,676, and 25,737. Support levels are identified at 25,517, 25,479, and 25,419. Technical experts suggest that if the index sustains below 25,600, a decline toward 25,450 cannot be ruled out, while the 25,700-25,800 zone may act as resistance.

Bank Nifty Shows Relative Strength

Bank Nifty closed at 59,891, declining 0.34% but demonstrating better resilience compared to the broader market. The banking index traded within the previous day's range and successfully defended both the 20-day EMA and the midline of Bollinger Bands on a closing basis.

Options Data Analysis

The weekly options data for Nifty reveals significant positioning by market participants. Maximum Call open interest was concentrated at the 25,800 strike with 1.61 crore contracts, followed by 26,000 strike (1.59 crore contracts) and 25,900 strike (1.33 crore contracts). The 25,800 level is expected to act as key resistance in the short term.

On the Put side, the 25,500 strike holds maximum open interest with 1.39 crore contracts, potentially serving as crucial support. Maximum Call writing occurred at the 25,600 strike with an addition of 98.07 lakh contracts, while maximum Put writing was observed at the 25,500 strike with 65.39 lakh contracts added.

For Bank Nifty monthly options, the 60,000 strike showed maximum Call OI with 14.63 lakh contracts, indicating potential resistance. The 59,500 strike held maximum Put OI with 15.40 lakh contracts, suggesting strong support at this level.

Market Sentiment Indicators

The Nifty Put-Call ratio increased to 0.77 from 0.76 in the previous session, indicating cautious optimism among traders. A PCR above 0.70 generally reflects bullish sentiment as traders sell more Put options than Call options.

India VIX, the volatility gauge, spiked 4.00% to close at 11.83, climbing above the 20-day, 50-day, and 100-day EMAs while testing the 200-day EMA intraday. This increase in volatility suggests heightened caution among market participants.

Derivative Activity Summary

Market-wide derivative activity showed mixed signals with varying levels of position building and unwinding across different stocks:

• Long Build-up: 26 stocks showed increased open interest with rising prices
• Long Unwinding: 54 stocks experienced declining OI with falling prices
• Short Build-up: 98 stocks saw increased OI with declining prices
• Short Covering: 34 stocks witnessed decreased OI with rising prices

Currently, SAIL and Sammaan Capital remain under the F&O ban, with no new additions or removals from the restricted list. Foreign institutional investors were net sellers worth ₹3,263 crores, while domestic institutional investors provided support with net purchases of ₹4,234 crores on January 19.

The Nifty 50 remained under pressure for the sixth consecutive session, closing 109 points lower at 25,586 on January 19, marking a weak start to the week with increased volatility concerns as the VIX crossed key levels.

Technical Breakdown Signals Weakness

The benchmark index tested the recent swing low of 25,473 and approached the lower Bollinger Band during intraday trading amid above-average volumes. Significantly, the Nifty closed below its 100-day EMA for the first time since September 30, 2025, representing a notable technical deterioration.

The index now trades below all key moving averages except the 200-day EMA, indicating broad-based technical weakness. Momentum indicators reinforced the bearish sentiment, with the Stochastic RSI showing a negative crossover and the MACD remaining below both the reference line and zero line with a weakening histogram.

Critical Support Levels Under Focus

According to Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities, the 25,500–25,450 zone represents crucial support, coinciding with the recent swing low and historical demand areas. A decisive breakdown below 25,450 may accelerate selling pressure and open room for a short-term correction toward 25,300, where the next support cluster is positioned.

On the upside, immediate resistance lies at 25,700–25,730, which is expected to act as a near-term hurdle. A sustainable move above 25,730 would be essential to revive bullish momentum and enable a stronger recovery.

Options Data Suggests Range-Bound Movement

Weekly options data indicates the Nifty 50 is likely to trade within the 25,500–25,800 range in the short term. The maximum Call open interest was concentrated at the 25,800 strike, followed by 26,000 and 25,700 strikes, while the 25,500 strike held maximum Put open interest.

Bank Nifty Slips Below 60,000 Mark

The Bank Nifty declined 204 points or 0.34% to close at 59,891, falling below the psychologically important 60,000 level. Despite the pressure, the banking index maintained its position above all key moving averages and the falling support trendline.

Vatsal Bhuva, Technical Analyst at LKP Securities, noted that the index continues to sustain above its key short-term 20-day SMA, maintaining a bullish undertone. However, fresh momentum would likely require the index to close above 60,000 and sustain this level for 2–3 sessions. Near-term support is positioned at 59,500, while resistance is seen at 60,400.

VIX Signals Increased Caution

The India VIX, commonly referred to as the fear index, jumped 4.00% to 11.83 after remaining range-bound over the previous three sessions. The volatility index tested its 200-day EMA and crossed the 12 level during intraday trading, signaling increased caution for market participants as bears may be gradually gaining strength.

The combination of technical breakdown, increased volatility, and bearish momentum indicators suggests market participants should exercise caution in the near term, with key support levels becoming critical for determining the index's next directional move.