Nifty 50 Falls Below 23,000 as Monthly Expiry Sparks Volatility

The Nifty 50 index experienced significant downward pressure on Monday, closing at 22,780.25 after falling 1.56 percent. This marks its lowest level since April 2, as the index slipped decisively below the psychologically important 23,000 mark early in the trading session and remained weak throughout the day.

The market opened with a gap-down and faced immediate selling, which pushed the index beneath the key support level within the first 15 minutes. Heavyweight stocks such as HDFC Bank, Reliance Industries, and ICICI Bank played a major role in driving the index down, collectively eroding about 135 points. Market breadth was notably poor, with only three companies within the Nifty 50 managing to close in positive territory.

Volatility surged sharply in response to the selling pressure. The India VIX, a measure of expected market volatility, rose by 12.15 percent to 13.63, while the implied volatility climbed to 16.32, reaching levels not seen in recent times. This increase reflects heightened uncertainty among traders, especially with the September monthly expiry approaching.

Technically, the index formed a large bearish candle on the daily chart as it broke below the crucial 23,000 support zone, closing under the previous support at 22,826. This breakdown signals ongoing weakness and suggests that further declines are possible if the index fails to stabilize.

The selling was broad-based, affecting all major sectoral indices, and was accompanied by higher trading volumes compared to the previous session. Monday also marked a fresh distribution day, indicating that institutional investors were reducing their holdings amid the downtrend.

Immediate support for the Nifty is now identified near 22,737. Should the index close below this level on Tuesday, it could trigger additional declines. On the upside, reclaiming Monday’s high of 23,080.25 is necessary to regain some buying momentum. A more attainable initial target for bulls would be a rise above 22,921, which represents a 50 percent retracement of Monday’s drop and could signal the formation of a higher low.

From a technical perspective, the broader picture favors bears. The Nifty currently trades roughly 4.94 percent below its 50-day moving average, with Bollinger Bands trending downward, which indicates continuing weakness. The 8-day exponential moving average (EMA) stands at 23,172 and acts as a resistance level during any pullbacks above 22,921.

Momentum indicators remain subdued. The Relative Strength Index (RSI) has fallen to 27.69, signaling oversold conditions, though it remains above the lowest point recorded on September 15. The Moving Average Convergence Divergence (MACD) continues to show bearish trends across multiple timeframes. Additionally, the Average Directional Index (ADX) is at 33.57, suggesting that the current downtrend retains its strength.

As September’s monthly expiry nears, market participants should pay close attention to rollover activity and shifts in open interest. The confirmed downtrend in the Nifty means that any recovery attempts will require sustained buying enthusiasm and improvements in technical indicators to gain traction.

For now, initiating fresh long positions carries higher risk until a more solid base forms. The market is likely to face pressure in the near term, with any rebounds encountering resistance at elevated levels. The key area to watch is whether the Nifty can hold above the 22,737 support and construct a recovery pattern in the upcoming sessions.

Dalal Street Investment Journal (DSIJ), the source of this analysis, has been a trusted provider of financial insights and stock recommendations in India for nearly 40 years. Known for its credible research and advisory services, DSIJ offers detailed market evaluations and investment strategies through its publications and advisory channels. As a SEBI-registered Investment Adviser and Research Analyst, DSIJ aims to equip investors with information that supports informed decision-making in Indian equity markets.