In conversation with ET now, Rohit Srivastava, Founder, Money Analysis and India Charts A brief look at the current setup suggests that while the breakout is technically significant, a very short-term oversold reading could pave the way for a short-term pullback.
“So, well, the breakdowns that we’ve seen cause potential losses, but what’s happening at the same time is that the market is very short-term oversold and actually, I would say, oversold, so it gives us a sense that we might be at a point where we might be able to pull back a little bit or get some relief, if I’m not sure if it’s going to be two days or the last day or two in the market. So it might be a counter-trend move in the whole structure. But surely it will bring some relief or some hope when it happens,” Srivastava said.
According to him, the charts indicate the possibility of a reversal in the near term, especially in NIFTY 50 and d NIFTY BANK.
“So my feeling is that you can get the Nifty to bounce back from here to not only retest 24,600 which was the critical breakout point, but maybe even try to push above that to 25,000 again – that’s what the market is trying to do. Something like that in the Bank Nifty would mean something close to 60,000,” he said, literally starting another point and not judging.
Importantly, Srivastava cautioned against aggressive selling at current levels, especially given the extent of the recent decline.
“So, we really don’t want to panic sell today because we’ve already reached the third day of a sustained sell-off and that puts us at a very short-term oversold point. We’ll reassess the overall picture when we get that bounce. A lot will also depend on changes in the geopolitical situation, but that’s what we’re calling a technical setup right now.”
VIX Spike: Panic or Forward?
Another focal point for traders is rapid growth India VIXis often called the market fear gauge. After hovering in the double digits just a few days ago, the index has risen more than 20%, hitting the 21 mark – a move that reflects growing anxiety.
Addressing the hymn, Srivastava cited historical examples.
“So, we’ve seen a lot of spikes in the last 12 months with the VIX ending around 22 and something more serious when some kind of issue has occurred – whether it’s the election, whether it’s the depreciation of the rupee. We’ve also seen it go up to 30 at times. So those are the areas where the VIX is very worried or people say they’re very worried. Despair or near 22, but I would say around 30. Almost is a good point.
He added that while current levels suggest heightened concern, they may not yet signal heightened panic.
“If you get really close to 30, I would be a little bit more optimistic about the market pricing in maximum panic mode. But that hasn’t happened yet, so we’ll see how the VIX plays out in the short term. But then 21, 22 is the level we’ve bounced back to several times in August 2024 and you had it last November 24. Tariffs are in place, we’ve had the VIX spike around Looked at 23 and we are now at 21, so two or three points and you are beyond that limit, of course, the situation should be worse than what it is.
Tactical patience is advised
For now, the technical landscape suggests the market is caught between structural weakness and temporary exhaustion. An aid rally could emerge as an opening to oversold conditions, but sustainability will depend on a wider range of drivers – including geopolitical developments and volatility trends.
Until then, experienced observers advise patience rather than reaction, especially when fear-mongering risks locking in losses as the market nears its short-term range.
