Trade Setup for April 1: Nifty looks to prevent 22,000 retest as crude oil prices remain elevated

Markets remained under pressure for yet another session on Monday, with the Nifty slipping below the 22,500 mark.

The index continued its downward trajectory as persistent selling pressure dominated sentiment, amid ongoing tensions between the US and Iran that kept risk appetite subdued.

Nifty opened with a sharp downside gap of 270 points, tracking the escalating West Asia crisis and a rise in crude oil prices. From an early low of 22,472, the index staged a brief 200-point recovery within the first 20 minutes of trade.

However, the rebound failed to sustain, as profit-booking emerged at higher levels and persisted through the session. The Nifty eventually closed near its day's low, down 488 points at 22,331, marking its lowest close since April 7, 2025.

Among Nifty constituents, Hindalco, Tech Mahindra, and Coal India bucked the broader trend to emerge as top gainers. On the flip side, financial names such as Bajaj Finance, Shriram Finance, and SBI were among the worst hit.

All sectoral indices ended in the red, led by sharp declines in PSU Banks, Financial Services, and Realty.

Broader markets mirrored the benchmark weakness, with both Nifty Midcap and Smallcap indices falling 2.7% each.

In the currency market, the rupee opened sharply higher, gaining over 100 basis points after the RBI's move on Friday to impose a uniform $100 million cap on banks' net open forex positions, replacing the earlier 25% capital limit aimed at curbing speculative long-dollar bets.

However, these gains proved short-lived amid rising crude prices and weak equity markets. The rupee eventually ended 2 paise lower at a fresh lifetime low of 94.83 against the US dollar.

Going ahead, markets are likely to remain fragile, with crude prices, currency movements, and foreign fund flows expected to drive near-term direction. Volatility is likely to stay elevated amid the uncertain global backdrop.

With markets shut on Tuesday for Mahavir Jayanti, Wednesday's trading session will factor in interim global developments.

Technically, after slipping below the immediate support of 22,500, the Nifty could extend its decline towards the 22,000-21,900 zone in the near term, according to Nagaraj Shetti of HDFC Securities.

Nilesh Jain of Centrum Finverse said the overall structure remains weak, with support seen at 22,000 followed by 21,700, while resistance is placed around the 22,700 level.

He added that given the recent sharp correction, the possibility of a strong pullback cannot be ruled out.

Rupak De of LKP Securities said a decent recovery from Wednesday cannot be ruled out. On the downside, 22,200 is likely to act as a crucial support, from where a meaningful bounce could emerge.

However, a break below this level would negate the chances of a bullish reversal.

Nandish Shah of HDFC Securities noted that the Nifty's short-term trend remains weak, as it continues to trade below key moving averages and the March 23 swing low of 22,471.

On the upside, 22,800 remains an immediate hurdle, while the 21,700–21,900 zone is expected to provide support.