Trade Setup for April 16: Volatility index drops 19% signals easing market

The Indian stock market has staged a remarkable recovery, erasing all losses triggered by US President Donald Trump’s reciprocal tariff announcement earlier this month. This rebound has made India the first major global market to recover fully from the tariff shock.

After a long weekend, the market opened with a strong gap-up on April 15. The Nifty 50 jumped 540 points at the opening bell, sustaining momentum through the session to close with hefty gains of 500 points at 23,329. In just five trading sessions since its April 7 low of 21,743, the Nifty has rallied over 1,600 points.

Broader Market Participation

The rally wasn’t limited to frontline stocks — the Nifty Midcap 100 and Smallcap 100 indices also climbed by 2.90% and 3.10% respectively, indicating broad-based buying interest. All sectoral indices ended in the green for the second consecutive session, while the volatility index dropped 19%, signaling easing market nerves.

Heavyweights Lead the Rally

Out of the 50 Nifty stocks, 49 closed higher, with heavyweight players like Reliance Industries, HDFC Bank, and ICICI Bank fueling the surge. Shares of Tata Motors, Samvardhana Motherson, and Sona BLW jumped up to 8%, reacting to Trump’s latest comments suggesting he would support automakers as they transition production back to the US.

In terms of market capitalization, BSE-listed companies added ₹11 lakh crore in March, pushing total market value to ₹412 lakh crore.

Key Triggers Ahead

Investors will keep a close eye on:

Retail inflation (CPI) data due post-market on Tuesday.

Quarterly earnings reports from Wipro and Angel One.

Financial updates from Ireda, ICICI Lombard, and ICICI Prudential Life, which announced their Q4 numbers after market hours.

Siddhartha Khemka of Motilal Oswal expects the positive sentiment to persist, driven by optimism around easing global trade tensions and a potential softening of US tariffs.

Technical Outlook

According to Nagaraj Shetti of HDFC Securities, the Nifty’s near-term uptrend remains intact, with the next resistance zones at 23,650 and 23,870 in the coming 1–2 weeks. Immediate support lies at 23,200.

However, Rupak De of LKP Securities cautioned that the market may show signs of fatigue after its sharp rise, and a minor pullback could occur. He sees support at 23,300, with a decisive drop possibly leading to 23,000. On the upside, resistance is at 23,370 and 23,650.

Nandish Shah from HDFC Securities pointed out that the Nifty has successfully crossed its 20, 50, and 100-day EMAs, a bullish sign. The next significant hurdle for the index lies at 23,869, while the 22,900–23,000 range should offer immediate support.