The recent market crash is analysed using Elliott Wave theory, suggesting it wasn’t a coincidence. Key highlights include examining the Nifty and Bank Nifty’s technically-driven movements rather than random actions.
The “STT Shock” is explored to understand its inevitability in the market charts. Analysts question whether the recent price bounce is deceptive, examining impulsive versus corrective structures.
Critical Support Zones
Critical support zones for ITC are identified between 410-450, considering Wave 5/ABC scenarios. Waaree Energies’ corrective structure is analysed with support at 2400-2500, noting patience is advised before adopting a bearish stance.
Analysis also extends to potential market trends, with further content exploring sell-offs in gold and silver. Discussions continue on the subdued Australian dollar and oil prices amid geopolitical tensions, noting the recent interventions in USD/INR favouring its upside.
Editor’s picks cover the EUR/USD and GBP/USD movements alongside bitcoin’s market dip. Recommendations for the best brokers for 2026 are also featured. Information provided is for informational purposes only, reminding readers of the associated risks and the need for research before any financial decisions.
Market Trends and Strategy
The recent crash, triggered by the STT shock, was a technical event we saw coming in the charts and not simply bad luck. The sharp drop in the Nifty 50 during January 2026 caused the India VIX to spike above 25, a level of fear not seen since the uncertainty surrounding the 2025 general elections. This signals that high volatility is likely to persist in the coming weeks.
We view the current bounce in the Nifty and Bank Nifty as a potential trap or a corrective wave, not the beginning of a new sustainable rally. For derivatives traders, this means using any strength to build cautious short positions, perhaps by buying puts or selling out-of-the-money call spreads. The market structure suggests another downward leg is more probable than a move to new highs.
This bearish view is strengthened by the persistent strength of the US dollar, which puts pressure on emerging markets. Looking back at 2025, we saw how a rising dollar led to significant capital flight from Indian equities. FII data for January 2026 confirms this trend is repeating, with foreign investors having already pulled over $3 billion from the cash market.
The ongoing sell-off in gold and silver further supports a risk-off environment where traders prefer the safety of the US dollar. Gold’s inability to hold key support levels, despite geopolitical tensions that should be supportive, is a major warning sign for risk assets. This reinforces our cautious stance on the broader market indices.
For specific stocks, ITC is testing a critical support zone between 410 and 450. A failure to hold this level could accelerate its decline, making protective puts an attractive strategy. Similarly, Waaree Energies must hold its 2400-2500 support to avoid a deeper correction.
Right now, patience is the best strategy before turning aggressively bearish. Implied volatility is currently elevated, making option premiums expensive for buyers. We are watching for this bounce to lose momentum before building larger short positions through index futures and puts for late February and March expiries.
