Sellers continued to dominate proceedings on NIFTY, with the ongoing losing streak now extending to the sixth consecutive session. Starting the weekly expiry session with another gap-down opening, prices continued to drift lower through the day. Although buyers attempted to recover some ground during the second half, the selling pressure resurfaced in the final hour, resulting in a sharp decline of nearly 80 points. The index eventually wrapped up the session at 24154, with losses of 0.55%.

The technical structure continues to deteriorate, with prices now slipping below the crucial 50 DEMA, clearly signaling a shift in control from buyers to sellers and highlighting further weakness in the near-term setup. That said, the presence of several key technical references in the vicinity points towards the possibility of strong demand emerging at lower levels. The 61.8% Fibonacci retracement of the prior upswing from 23600, placed around 24050, represents a crucial support level. The significance of this zone is further amplified by the presence of a bullish gap near 24040, making the 24050–24040 region an important support cluster. The Renko charts also add further significance to this zone. While all box sizes on the 1-minute Renko charts of the index have already witnessed a brick reversal, the 1% 1-minute Renko chart is yet to register one. A break below 24090 would trigger a brick reversal on this chart as well, signaling further deterioration in the short-term technical structure and warranting heightened caution. However, the presence of strong technical support levels on the way down does not, by itself, guarantee a bounce or a trend reversal. The market’s response at these critical zones will therefore be important to monitor. A decisive break down below the 24050–24040 support cluster, particularly if accompanied by a brick reversal on the 1% Renko chart, could accelerate the ongoing down move and trigger a probe towards much lower levels, with the index potentially moving towards the lows made in late July. In terms of levels the 24100-24000 is an immediate and very important support band, whereas on the upside immediate resistance is now likely to be found in the 24250-24300 band, followed by a stronger resistance at 24400.

We have been highlighting the MIDCAP index’s struggle in our earlier commentaries, and the recently triggered Weak Breakout on the smaller time-frame charts further warrants caution going forward. Given the prevailing uncertainty at elevated levels, adopting a selective approach and focusing on stocks demonstrating relative strength is likely to yield better results in the near term.

Key levels to watch

NIFTY

Support: 24100- 24000

Resistance: 24250- 24300

BANKNIFTY

Support: 57150 – 57900

Resistance: 57750 – 58000 

Hitesh Rathi, Technical Analyst -Equity & Derivatives, Angel One.