The Nifty 50 experienced heightened volatility on January 21, closing at 25,158 points, marginally below the critical 200 DEMA level of 25,160. The index posted a one-third percent decline, forming a doji-like candlestick pattern that suggests market indecision following the recent sharp correction. This technical formation increases the possibility of a trend reversal, though confirmation from subsequent sessions remains necessary.

Technical Analysis and Key Levels

The current market structure reveals significant bearish pressure across multiple timeframes. The Nifty 50 now trades below all major moving averages, with the 10-day EMA breaking below the 100-day EMA and the 20-day EMA slipping beneath the 50-day EMA. The index has also shifted below the lower Bollinger Band, indicating extended weakness.

Key resistance levels based on pivot points stand at 25,272, 25,362, and 25,507, while support levels are positioned at 24,980, 24,891, and 24,745. A decisive fall below 25,900 could drive the index toward 24,600-24,400 levels, whereas a move above 25,300 may target 25,450-25,600 levels.

Bank Nifty Performance

The Bank Nifty closed at 58,800, declining 1% during the session and forming a bearish candle with long shadows on daily charts. Unlike the Nifty 50, the banking index slipped below the 50-day EMA but continues to sustain above longer-term moving averages including the 100-day and 200-day EMAs.

Options Activity and Market Positioning

Options data provides insights into market sentiment and potential support-resistance zones. For Nifty options, maximum Call open interest concentrates at the 25,500 strike with 1.13 crore contracts, establishing this as a key resistance level. The 25,000 Put strike holds maximum open interest with 88.66 lakh contracts, indicating strong support expectations at this level.

Significant Call writing occurred at the 25,200 strike with 42.06 lakh contracts added, followed by 25,100 and 25,300 strikes. On the Put side, maximum writing was observed at the 24,700 strike with 25.9 lakh contracts added.

Fund Flows and Market Sentiment

Foreign Institutional Investors (FIIs) continued their selling pressure with net outflows of ₹1,788 crores on January 21, while Domestic Institutional Investors (DIIs) provided market support through net purchases of ₹4,520 crores. The Nifty Put-Call ratio increased to 0.78 from 0.72 in the previous session, suggesting a slight improvement in bullish sentiment despite the overall bearish trend.

Volatility and Risk Assessment

The India VIX jumped 8.25% to close at 13.78, marking the highest level since June 23, 2024. This surge in volatility reflects increased market uncertainty and risk aversion among participants. Short and medium-term moving averages for VIX are trending upward, signaling continued elevated risk for bullish positions.

F&O Activity Summary

Market positioning data reveals mixed sentiment across individual stocks:

• Long Build-up: 26 stocks showed increased open interest with rising prices
• Long Unwinding: 72 stocks experienced declining open interest with falling prices
• Short Build-up: 77 stocks saw increased open interest amid price declines
• Short Covering: 37 stocks witnessed decreased open interest with price increases

In the F&O ban segment, Bandhan Bank was added to the list, while SAIL was removed. Sammaan Capital remains under the ban, indicating these securities have crossed 95% of market-wide position limits.

Market expert Sushil Kedia, founder of Kedianomics, has made a bold prediction for the Nifty 50 index, forecasting it could breach the 32,000 level by the end of the current year. This projection suggests a substantial 28% rally from current market levels, despite ongoing volatility and panic selling in the markets.

Market Outlook and Key Targets

Kedia's bullish stance comes even as markets experience significant turbulence. He has identified specific milestones for the benchmark index's potential upward trajectory:

The market expert believes that despite current volatility, the larger picture indicates strong bullishness for the benchmark indices.

Statistical Analysis and Market Behavior

From a statistical perspective, Kedia noted that markets have already witnessed a three-sigma move, which typically implies a very high probability of reversal. He interprets the continuation of this move as evidence that markets are overstretched rather than structurally broken.

Kedia emphasized that markets are currently in a narrow time window where catharsis - a climactic overreaction driven by fear and news flow - could occur at any point. He described observing "unnatural moves" in the market over recent trading sessions.

Investment Strategy and Timing

The Kedianomics founder strongly advises against participating in markets during periods of extreme volatility. His investment philosophy includes several key principles:

• Avoid panic-driven trading: "You do not participate when the blood is flowing on the street"
• Wait for clarity: The right moment to enter is when bad news is fully disclosed and markets refuse to fall further
• Focus on long-term gains: Emphasize outsized long-term returns over marginal short-term moves
• Avoid over-reliance on forecasts: Most market predictions are "little more than imagination, lightly tempered by historical data"

Cautionary Advice on Forecasting

Despite making his own market projection, Kedia expressed skepticism about short-term forecasting, calling forecasts his "personal pet peeve." He cautioned investors against attempting to predict incremental movements, such as 2% downside on indices or 4-5% cuts in individual stocks during violent market phases.

Kedia stressed that trying to predict small moves during periods of extreme volatility represents "misplaced confidence" and advised investors to focus on the bigger picture rather than chase marginal gains during turbulent times.

Market Sentiment and Future Direction

While maintaining his bullish long-term outlook, Kedia acknowledged the importance of timing market entry correctly. He believes that clarity on the trigger behind current selling pressure is critical for making informed investment decisions. The expert suggests that a shift in market sentiment will be signaled when markets refuse to fall further despite negative news flow.