May 20, 2025
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Analysis by SAMCO Securities for 21 May 2025
by Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities
Nifty Slides Into Weak Zone; Support Turns Resistance as Bulls Lose Steam
Nifty index came under intense selling heat influenced by weak global triggers that triggered profit-booking bouts, breaking through a major support level and leaving bulls visibly nervous. From the word go, sellers took charge and maintained the upper hand, with not a single hourly candle managing to close above its prior high, hinting at relentless pressure. The index ended the day deep in red, shedding 1.05% (-261.55 pts) to wrap up at 24,683.90.
From a structural angle, the Nifty looks frail, and unless today’s low holds, selling waves may stretch further. The price movement reflects a defensive mood, as bullish momentum seems to be draining out. The index has not just shown cracks but has closed below the vital 24,800 mark, which earlier acted as the breakout neckline—this strong bearish close near the day’s low underlines a weak chart setup. Intraday, buyers couldn’t stage any bounce back, highlighting how strongly bears are standing their ground and suggesting an active short buildup.
With FPIs ramping up their short bets in the futures space and the index failing to reclaim higher ground, the broader bias continues to tilt toward the bearish camp. Nifty now flirts with a key juncture—hovering near its 10-day EMA and a rising trendline. A breakdown below today’s low may unleash deeper downside momentum. Currently, prices are trading below the prior session’s low, turning that zone into a near-term hurdle. Former support areas morphing into resistance is a textbook symptom of a fading uptrend. Unless 25,000 is decisively taken back, the bigger picture remains blurry and cautious. Minor up-moves are likely to invite fresh shorts, reinforcing a neutral-to-bearish view.
The next strong support lies near 24,500. A solid close under 24,650 could amplify the downside and drag the index further into weaker territory. Conversely, a bounce above 24,830 might squeeze out some shorts and lift the index towards 25,000, potentially opening up a new long window. On the momentum meter, RSI has slipped beneath 60 on the daily chart, reflecting deteriorating strength. Traders could adopt a “sell-on-rise” approach for now, and only a durable move past 24,850 can breathe life back into the bulls.
Options Market Pulse:
In the derivatives pit, bearish footprints are deepening. Call writers are stacking positions at higher strikes, while put writers continue retreating to lower levels—a textbook signal of caution. Heavy call writing at far-off levels shows a upside is capped unless a major buying wave erupts. The 25,000 strike call now wears the crown with the highest open interest of 1.74 crore contracts—marking it as an immediate resistance fortress. Meanwhile, the 24,500 strike put saw notable additions of 68.65 lakh contracts, making it a sturdy support base. An OI belt between 24,800 and 25,000 has now turned into a firm resistance wall. Furthermore, the Put-Call Ratio (PCR) plunged from 0.60 to 0.49—pointing toward a bearish tilt in sentiment. Yet, this level also reflects oversold territory, hinting at a possible short-term bounce. Max Pain remains pinned at 24,750, indicating that the market is still undecided on its next strong leg.
Volatility Snapshot:
India VIX ticked slightly higher by 0.17%, closing at 17.38. Though the rise is subtle, it still portrays unease in the air. VIX remaining over the 15 mark, especially during bearish waves, often signals hesitance among bulls and potential turbulence ahead.
Market Viewpoint:
With Nifty cracking below a crucial support, the bears are visibly tightening their hold. As put writers descend to lower levels, it signals eroding strength underneath. Unless the index conquers the 24,850–25,000 resistance belt, bulls are likely to stay on the sidelines. A decisive breach below 24,650 could accelerate the downward slide, dragging the index toward 24,500. At present, the mood remains cautiously bearish, with every bounce appearing to be an opportunity for sellers to strike.
