Nifty 50 technical outlook: As the additional 25% tariff imposed by US President Donald Trump on India came into effect, the Indian stock market went into a meltdown mode.
The levy imposed for the purchases of Russian oil is over and above the 25% duties that Indian exports to the US attract, taking the effective tariff rate to 50%. This dented investor sentiment, leading to a sharp fall in the index for the second consecutive session today, August 29.
Against this backdrop, while the Sensex lost 0.87% or 706 points to end at 80,080.57, the Nifty 50 nosedived 211 points or 0.85% to 24,500.90, essentially breaching its 100-EMA on the daily chart.
Nifty below 100 EMA: Short-term pain ahead?
According to analysts, Nifty’s breach of its medium-term support at the 100-day EMA around 24,600 signals that the bears could remain in charge of Dalal Street for some time ahead.
Rupak De, Senior Technical Analyst at LKP Securities, warned that the bears remained at the helm as the index slipped below the 100-EMA on the daily chart, confirming a short-term bearish trend. Moreover, the index broke down from its recent consolidation, signalling increasing weakness, he said.
Meanwhile, Bajaj Broking also said that the index formed a second consecutive sizable bear candle with a lower high and lower low, signalling continuation of the corrective decline. “Index in the process filled the last Monday’s gap area and closed below the 100-day EMA,” it added.
Going ahead to pause the current downtrend, the index needs to start forming higher highs and higher lows in the daily chart; failure to do so will keep the bias down, the brokerage opined.
De, however, added that a positive divergence is visible on the hourly chart, suggesting the possibility of a small bounce-back before further decline.
As the market setup turns from a “buy on dips” to a “sell on rise”, De advises that the staying light appears to be a prudent strategy in the current fast-changing dynamics.
Nifty technical levels to watch out for
According to LKP Securities analyst, on the higher side, resistance is placed at 24,650-24,850, while on the lower side, support is seen at 24,480-24,300.
Bajaj Broking opined that Nifty 50 has an immediate support base placed at 24,400-24,350 levels — the confluence of the recent lows and the key retracement area.
“Index holding above the same will lead to a consolidation in the range of 24,400-24,900. While failure to do so will signal acceleration of decline towards 24,000-23,800 levels being the confluence of the 52-week EMA and the previous major lows and the previous major breakout area,” it added.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
