On Friday, US equities witnessed a sharp sell-off, which in turn weighed on Gift Nifty and triggered a gap-down opening for the domestic market. As the session progressed, Nifty attempted an intraday recovery; however, during the last hour, selling pressure resurfaced, dragging the index lower. Nifty eventually ended the day with a loss of around 1%, closing tad above the 23100 mark.

Last week, prices had already witnessed a trendline breakdown connecting major swing lows on the daily chart. Although some consolidation was seen near the previous swing low zone in the latter half of the week, today’s price action continued the downside trajectory, confirming a lower-top, lower-bottom formation on the daily chart. Technically, Nifty is trading below its major moving averages, and until these levels are reclaimed, a cautious approach remains warranted. The 20 DEMA around 23600 and 50 DEMA around 23900 now act as strong resistance zones. In the near term, the bearish gap around 23280 and last week’s recovery zone near 23500 are expected to act as immediate hurdles. On the downside, Nifty has already retraced a significant portion of the April rally and is now testing the 61.8% Fibonacci retracement zone of the move from 22200 levels. The 23100–23000 zone remains a crucial support area for the weekly expiry. A decisive break below this zone would indicate that the April rally has fully fizzled out, potentially opening the gates for further downside towards 22700–22500 in the near term. Traders are advised to closely monitor these levels and structure positions accordingly. Price action over the past month suggests a time-wise correction with choppy movement dominating the index. In such conditions, stock-specific momentum plays become more important. During the day, selective pharma and healthcare counters showed strong relative strength, and such pockets of outperformance are likely to continue, warranting a focused, selective approach.

Key levels to watch

NIFTY

Support: 23000 – 22850

Resistance: 23300 – 23400

BANKNIFTY

Support: 53900 – 53700

Resistance: 54500 – 54800

Rajesh Bhosale, Technical Analyst, Angel One