A strong across-the-board selloff hit the market benchmark Nifty hard on September 26.
During intraday trade, the index fell to 16,978.30, below the psychologically important level of 17,000. However, it recovered and managed to settle above the 17,000 mark, with a loss of 1.80% at 17,016.30.
Nifty is up 12% from its 52-week low of 15,183.40 which it hit on June 17, 2022. Since June, the index has been hovering in a range and has failed in its attempt of sustaining above 18,000.
The fall of September 26 seems to have raised concern will Nifty respect the level of 17,000 or fall below it?
The fundamental factors are pressing. The end of quantitative easing (QE) and the three consecutive rate hikes by the US Fed has resulted in a liquidity shock globally. Analysts point out that besides liquidity shock, the increase in interest rates is causing a demand shock with housing leading to a decline in demand.
Even though India has been in a relatively sweet spot, it cannot decouple from the global system completely. So, coming back to the moot point, will Nifty fall more?
Here's what 8 analysts have to say:
Analyst: Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After a decisive downside breakout of the immediate support of minor up trend line at 17,500 levels, the Nifty is now sliding down to the crucial lower support around 16,800 levels as per the concept of change in polarity.
Previously, this value area (16,800) area has witnessed many hits and misses in the past and the underlying showed sharp follow-through movements post its upside and downside breakouts in this area. Hence, there is a higher possibility of an upside bounce from the lower support in the short term.
The short-term trend of the Nifty is sharply down and the weakness is expected to continue for the next one-two sessions. The lower support area of 16,800 is expected to offer the base for the market in the short term.
Analyst: Rupak De, Senior Technical Analyst at LKP Securities
Nifty fell below the previous consolidation low on the daily chart. However, it has found support in the long-term moving average, the 200-day moving average (DMA), which may act as the "line of polarity" for the short term. The momentum indicator is in bearish crossover and falling.
The trend for the short-term looks negative; however, further selling pressure may be seen only below 16,950, where the 200 DMA is currently placed. On the higher end, immediate resistance is visible at 17,300-17,350.
Analyst: Ajit Mishra, VP - Research, Religare Broking
With no respite on the global front and a resumption of selling from foreign investors, we expect markets to remain under pressure and test the 16,800-16,900 zone in Nifty.
Analyst: Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities
The biggest support for Nifty to watch will be 16,907 and if the index holds this level, there is a bright chance that Nifty could bounce to 17,451 and then at the 17,727 mark.
Analyst: Rahul Goud, Research Analyst - Equity Research, CapitalVia Global Research
Nifty closed near the 200 SMA (simple moving average), which is located near 16,992. If this level breaks down on a closing basis, we might see more decline from this level.
The 0.382% Fibonacci retracement level is at 16,989. With a stop loss of 17,440, a downside target of 16,680 levels in the next few days is possible. Additionally, the collapse of the uptrend line has been confirmed, which is confirming our negative viewpoints.
Analyst: Palak Kothari, Senior Technical Analyst, Choice Broking
At present, the Index has good support around 16,800. Breaching below this level can show more downside till the 16,500-16,400 level else we can expect a good pullback above the 17,200-17,300 level.
Analyst: Jatin Gohil - Technical and Derivative Research Analyst at Reliance Securities
The key technical indicators are negatively poised on medium-term as well as short-term timeframe charts, while its near-term indicators are stuck around the oversold zone.
As per the current set-up, the index may respect its psychological level, wherein a pullback or near-term consolidation cannot be ruled out before a fresh down-move starts.
In case of a pullback, the index will face a hurdle around the 17,300 level, where its 50-day EMA (exponential moving average) is placed. However further decline can drag the index towards 16,750-16,440-16,275 levels.
Analyst: Osho Krishan, Senior Analyst - Technical & Derivative Research, Angel One
The benchmark index Nifty has now entered a cluster of key moving averages i.e. 89-day EMA and 200-day SMA. Also, the previous breakout point coincides with around 16,800, hence, as of now, we do not expect the correction to extend below these levels.
If it gets breached, we may have to revisit our view. But as of now, we would like to believe we are very much close to the sacrosanct supports, and since markets are extremely oversold, it’s advisable to trim existing shorts and start nibbling into quality propositions.
Also taking a glance at the US markets, we will not be surprised to see some relief in key indices there as they have been on a continuous declining spree for a month. And any rebound could certainly provide the much-needed cushion for our domestic markets, and since we are relatively stronger, a possibility of a sharper bounce back cannot be ruled out.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.