Nifty’s resilience was evident today as it touched the 24500 mark and staged a sharp rebound. This significant intraday swing, while potentially amplified by today’s options expiry, underscores a notable shift in momentum. Interestingly, on Tuesday, the 24500 level was highlighted as a critical threshold that, if breached, could have paved the way for further declines. However, the index demonstrated robust support at this juncture, propelling a sustained upward trajectory.

This rapid surge is pushing towards an extreme, reminiscent of the sharp rallies we observed around mid-September and early December. History suggests a similar pattern: the index tends to relinquish a significant portion of these dramatic gains in the ensuing trading sessions, though this unwinding typically unfolds over several days. Strategizing in such a volatile environment is far from straightforward, particularly for retail option traders who can find these market phases exceptionally deceptive. For seasoned professionals, however, maintaining a degree of patience often proves crucial in navigating these turbulences and allowing their strategies to realign with the broader market trend. The key lies in resisting impulsive reactions to these sharp moves and trusting in a more measured, longer-term perspective.

Having witnessed today’s emphatic upward thrust, my recommendation to our High Net Worth Individual clientele is to strategically initiate short positions in at-the-money (ATM) or in-the-money (ITM) call options. This tactical maneuver is predicated on the anticipation of a well-deserved technical retracement, which, based on our analysis, is likely to unfold between the latter part of May and the early days of June.

Nifty’s established support range between 23,800 and 24,000 on a spot closing basis remains a critical level to monitor. While the index appears to be nearing a significant high around 24,400, anticipating a reversal before this support zone is breached may be premature. A close below 24,000 would certainly suggest bearish momentum, yet waiting for additional confirming signals is prudent before definitively calling for a trend reversal.”

Simultaneously, keep a close watch on Nifty Bank. Should it revisit and close the gap created on Monday, it could strongly indicate an impending major reversal – a scenario I’ve been anticipating. This potential shift would gain further credence if key banking stocks witness specific declines in their cash prices: HDFC Bank falling below 1,875, ICICI Bank dropping beneath 1,360, and State Bank of India trading below 760. Tomorrow’s trading session promises to offer valuable insights into these developing scenarios.”

While the allure of predicting a market reversal at a potential high is strong, the current technical setup advises prudence. Prematurely calling for a trend change before the established support zone is violated carries the risk of being caught on the wrong side of a continuing uptrend. The adage “the trend is your friend until it bends” remains a valuable guide in such situations.”

“The market, much like a mirage in the desert, can offer fleeting glimpses of respite, as seen in the recent energetic bounce of the S&P 500. However, seasoned travelers know that such illusions can often mask a more arduous journey ahead. While the US index catches its breath, our focus must also turn to the Indian landscape, where the NIFTY appears to be navigating a more definitive, downward path, its direction influenced by established technical patterns and the looming significance of upcoming time cycle junctures. Let us not be swayed by the temporary oasis but rather chart the course of the more persistent trend.”

https://ganninsides.com/2025/04/05/shockwaves-in-the-financial-world-the-week-the-market-buckled/

The S&P 500’s recent volatility has been captivating, holding investors in suspense with its dramatic price fluctuations. As I noted in my previous update last Saturday, my analysis indicated a potential support level for the index within the 4850 to 4950 range on the cash market. Indeed, on Monday, the index touched a low of 4835 before staging a remarkable recovery of nearly 13%. Yesterday’s peak reached 5481, signifying a robust upward movement. Furthermore, regarding timing, I highlighted April 9 as a significant time cycle marker, and fortunately, that day witnessed a substantial upward surge. Looking ahead, the 5481 high will be a crucial level to observe. A breakout above this point could propel the rally further, potentially targeting the 5600 to 5650 area. Conversely, if the 5481 level holds, we should anticipate a subsequent move lower for the index.

Given the significant global events and the persistently high volatility, prioritizing risk management over pure profit potential is a prudent approach in these extraordinary times. Exercising considerable caution in all financial decisions is advisable. The next nearby time cycle dates to monitor are April 14 and April 21.

Given the current market dynamics, it’s wise to resist the allure of a perceived market bottom, as the anticipated rebound could prove to be a temporary reprieve. Following the eventual dissipation of this upward movement, my analysis suggests a potential descent towards levels beneath 4200 within the coming months. A more definitive signal of stabilization and a return to typical market behavior would likely coincide with the CBOE Volatility Index (VIX) registering a sustained decrease below the 25 threshold.”

NIFTY’s Bearish Grip: Analyzing Overnight Gaps, Support Levels, and Critical Time Cycles

Regarding the NIFTY, the occurrence of significant overnight gaps appears to hold limited technical significance in discerning the underlying trend. Typically, these abrupt price movements at the market open tend to be retraced or “filled” during subsequent trading sessions. Consequently, while these gaps can inject complexity and volatility, particularly for short-term traders navigating intraday price action, they often prove to be noise rather than a clear signal of the dominant trend.

However, adopting a broader perspective and allowing the market to digest these volatile swings can provide a clearer technical picture. Once the immediate turbulence subsides, the market’s behavior should ideally revert to its pre-established trajectory. In the context of the Indian markets, this trajectory has unfortunately been characterized by a bearish sentiment prevailing over the past several months. Despite intermittent short-covering rallies that offer temporary relief, the overarching pattern since September has been one of successive declines, each establishing new lower lows on the NIFTY chart. This reinforces the notion that the medium-term trend remains firmly entrenched in bearish territory.

Nevertheless, the short-term dynamics can present opportunities, albeit with inherent risks. Should positive momentum gather, the ensuing upward movement could indeed catch many market participants off guard, as evidenced by the sharp rallies witnessed in March. This highlights the potential for swift and unexpected reversals within the broader downtrend.

Given the current environment, which I continue to emphasize as being far from typical, exercising caution in trading volumes remains paramount. Operating with reduced position sizes can help mitigate the amplified risks associated with these abnormal market conditions and the unpredictable nature of overnight gaps. It underscores the importance of capital preservation and a more selective approach to trading amidst heightened volatility.

There is still always a process that we follow, and let’s discuss that below.

https://ganninsides.com/2025/04/07/deconstructing-niftys-expected-downward-movement/

Reflecting on the recent market activity, my update on April 7th specifically highlighted the 21500 level on the NIFTY as a significant area of support, anticipating that it could instigate short-lived upward movements. True to this expectation, the subsequent day, April 8th, saw a follow-up analysis where I identified 22200 as another support zone of moderate importance.

Strategically, my plan involved capitalizing on any upward retracements by initiating further short positions as the index approached the 22800 mark. Given the anticipation of a gap up at the market open tomorrow, April 11th (adjusting for the current date), I believe this upward jolt would present a more favorable opportunity to average into our existing put option positions for the June expiry, potentially securing better entry prices.

This approach underscores a tactical maneuver within a broader bearish outlook. While recognizing the potential for temporary rallies stemming from key support levels, the overarching strategy remains aligned with the prevailing medium-term downtrend. The anticipated gap up, while potentially creating short-term volatility, is viewed as a chance to enhance the positioning of our bearish bets at more advantageous levels. The focus remains on capitalizing on these transient rallies to strengthen our short positions, anticipating a continuation of the established downward trajectory in the weeks and months ahead. This disciplined approach aims to leverage short-term market fluctuations to optimize our medium-term bearish strategy.

Considering the cyclical patterns I’ve been monitoring, the periods around April 15th and, more significantly, the week commencing April 21st, appear poised to be pivotal junctures for market direction. The latter half of April, in particular, warrants close attention, especially concerning the banking sector as a whole, which seems to be entering a critical phase. My analysis suggests a potential shift in the primary driver of downward momentum. Having observed the IT sector undergo a substantial correction from January through April, it appears that this sector’s bearish influence may be waning, with the baton of downside leadership likely to be passed to the banking index. The magnitude of the decline witnessed in IT over the past few months could foreshadow a similar trajectory for the banking sector, anticipated to unfold from late April through mid-July.

Furthermore, April 9th marked a key cycle date specifically for NIFTY Bank. The breach of the low established on that critical date would serve as a significant confirmation, potentially unleashing a sharp and decisive downward move in the banking index. This breakdown below the April 9th low would likely signal the commencement of the anticipated bearish phase for the banking sector. Therefore, the coming weeks promise to be particularly insightful. The confluence of these time cycle dates and the anticipated rotation of downside leadership from IT to banking creates a scenario ripe with potential for significant market movements. Observing whether NIFTY Bank breaks below its April 9th low will be a crucial indicator in validating this outlook and the potential for a substantial decline to materialize. The unfolding dynamics should indeed provide compelling trading and investment opportunities, albeit with the need for careful risk management in these still-abnormal market conditions.

“NIFTY is likely moving towards the post-election crash low of 21,281 on the spot market. I think that level will also break, and the index should gradually move towards 20,200-20,300 on the spot market. Now, the question is whether this happens right away or after some bounce; that’s something I will try my best to address below.”

For the past several months, I have consistently highlighted the 21500-21700 range as a crucial support level. This zone indeed offered notable support in early March. However, the index is currently retesting this critical area, and as long as the 21500 level holds on a spot basis, we may still witness temporary upward movements before a potential continuation of the downward trend. Regarding NIFTY BANK, its projected cycle date falls on April 9th, and I anticipate that it too will likely retest its March low. We shall observe the outcome.

Follow on update for APRIL 8th

“Yesterday’s low of the S&P 500 should be an important bottom for the near term. So, from here on, NIFTY would have to establish its trajectory independently. For short-term trading, it’s not going to be an easy market. However, the underlying trend continues to be ‘sell on rise.’ Therefore, stay short and operate at less than your normal volumes, and be prepared to add further short positions if the NIFTY spot rallies towards 22800. Tomorrow’s RBI policy is going to be very important for Nifty Bank because that’s a cycle date for that index. For NIFTY in the immediate term, 22200 would be a somewhat important support.”

“Today, NIFTY reached its bear minimum target objective of 21844, thereby achieving equality between line B and line A. For a more detailed explanation, please refer to the post I shared with my subscribers on March 13th.”

NIFTY’s Trajectory: A Geometric Perspective