Sellers extended their dominance for another session, with losses mounting further on NIFTY. The session began on a very weak note, with prices opening with a significant gap down. However, prices thereafter remained confined within a narrow trading range, as buyers stepped in to limit any further downside. The index eventually wrapped up the session on a weak note at the 23914 mark, with losses of 0.59%.

The technical structure for NIFTY continues to deteriorate, with crucial support levels now being breached. Prices have slipped below the psychological 24000 mark for the first time in a month, a level that buyers had been defending aggressively. In addition, bears have now largely engulfed the entire rally from the swing lows established in July this year. A similar setup is visible on the 0.5% Daily Renko chart, where the index has formed a Bearish Swing Engulfing pattern, underscoring the weakening grip of buyers over the price auction. While buyers managed to prevent any further intraday losses, the overall technical setup has now clearly turned bearish. On the short-term 0.1% × 3 Daily Point & Figure chart, the index has triggered a Bearish Triple Bottom Sell, while a Double Bottom Sell (DBS) has emerged on the 0.25% × 3 Daily Point & Figure chart, providing further confirmation of the deteriorating structure. In light of these developments, adopting an extremely cautious approach at this juncture would be prudent. In terms of levels, the 23800–23750 band remains an immediate and crucial support zone. A decisive daily close below this band is likely to open the door for a further probe, initially towards the 23500–23450 zone in the short term. On the upside, the 24000–24050 band, which acted as an important support zone until recently, is now likely to emerge as an immediate resistance, followed by a stronger hurdle in the 24150–24200 band.

We had highlighted the need to exercise caution in our prior commentaries, and that view appears to have played out well over the course of the past month. With prices now breaking below key intermediate-term support levels, we continue to advocate a cautious view on the markets, with a need to avoid going overboard or venturing into aggressive trades until a meaningful trend reversal is signalled.

Key levels to watch

NIFTY

Support: 23800- 23700

Resistance: 24050- 24200

BANKNIFTY

Support: 56900– 56800

Resistance: 57200– 57300

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