The Nifty 50 ended lower for the third consecutive week, with volumes higher than the previous week. Despite the continued decline, the index has managed to hold on to its broader structure, as it continues to trade within a narrow range for the past 11 weeks.
The index slipped below its 10-week moving average and remains below the short-term 20-DMA and 50-DMA, reflecting weakness in the near-term trend. However, the decline was arrested near the 20-week moving average, which is currently placed around 24,036. The index also respected the rising trendline drawn from the April 2 low, providing support to the ongoing consolidation.
A key positive from the current setup is that the Nifty has not breached its previous swing low and has avoided forming a lower low. This indicates that the broader trend has not weakened significantly, with the market still in a phase of consolidation rather than a fresh downtrend.
24,000 Zone Emerges as Critical Support
Market activity remained muted after the introduction of the Closing Auction Session (CAS), with participation and volumes staying below earlier levels. The subdued activity suggests that investors are awaiting a decisive move before taking aggressive positions.
The 24,000 mark continues to be an important psychological support level for the index. The 20-week moving average near 24,036 further strengthens this support zone. A sustained breach below this area could increase selling pressure and alter the current market setup.
Meanwhile, the index has been formed higher lows while facing resistance near the previous highs, resulting in a compressed trading range. The narrowing Bollinger Bands on the weekly chart indicate declining volatility, which often precedes a sharper directional move once the range is broken.
Momentum Weakens, But Selling Pressure Remains Controlled
Technical indicators present a mixed picture. On the daily chart, the MACD line has moved below the zero line, highlighting a loss of short-term momentum. On the weekly timeframe, the MACD continues to remain below the zero line but is positioned above its signal line. The histogram remains negative, although the size of the negative bars has reduced, indicating that downside momentum has eased.
The Nifty’s relative strength compared with the Nifty 500 remains weak, suggesting that large-cap stocks have lagged the broader market during the recent period.
For the bulls to regain control, the index needs to move above and sustain over the 20-DMA, currently placed near 24,376. Holding above the August 19 low of 24,026 will also remain crucial to maintain the possibility of a recovery.
Breakout or Breakdown of the Range to Determine the Next Move
The technical setup indicates that the Nifty remains locked in the 24,000-24,400 range. Until the index breaks decisively on either side, traders should avoid aggressive directional positions.
A move above 24,400 would improve the market outlook and signal a possible resumption of the uptrend. On the contrary, a breakdown below 24,000 could weaken the structure and trigger further selling pressure.
Until a clear breakout emerges, investors should maintain a neutral to mildly positive approach and focus on stocks and sectors showing relative strength rather than taking broad market bets.
Stock to Watch: Glenmark
Glenmark has broken out from a 16-week cup pattern and closed at a fresh all-time high, indicating renewed buying interest. The breakout was supported by above-average volumes during the previous week, adding strength to the bullish setup.
The stock continues to trade in a strong uptrend, with both short-term and long-term moving averages trending higher. The Relative Strength line has moved to a new high, highlighting its outperformance compared to the broader market. The Bollinger Bands are expanding across multiple timeframes, suggesting increasing momentum, while the moving average ribbon remains positively aligned.
Momentum indicators also support the positive outlook. The weekly MACD has generated a fresh bullish crossover, and the 14-period weekly RSI is trading in the bullish zone, reflecting sustained strength. The Elder Impulse System has also formed a strong bullish bar, further confirming the improving trend.
The stock sustaining above ₹2,515 would keep the positive momentum intact. A move towards ₹2,588 is possible, while a breakout above this level can open the upside towards ₹2,652. Traders can maintain a stop loss at ₹2,460.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
