Nifty Faces Bearish Pressure as Key Supports Break, Analysts Eye 25,300 Levels
Nifty has broken key technical supports including the 20-day moving average at 26,062 and 50-day EMA at 25,902.7, marking the first such breach in over three months. Analysts warn of downside risks toward 25,300-25,350 levels, with heightened volatility and persistent selling pressure indicating continued weakness. Market experts recommend sell-on-rise strategies until the index decisively breaks above 26,100 resistance to restore bullish confidence.
*this image is generated using AI for illustrative purposes only.
The Nifty has entered a challenging phase, breaking below key technical supports and signaling potential further weakness ahead. After breaching its ascending trendline and closing under critical moving averages, the index faces downside risks that could extend toward the 25,300-25,350 zone.
Technical Breakdown Signals Weakness
The index has broken several crucial technical levels that analysts are closely monitoring:
| Technical Level | Value | Status |
|---|---|---|
| 20-day Moving Average | 26,062 | Broken |
| 40-day Moving Average | 25,970 | Broken |
| 50-day EMA | 25,902.7 | Broken |
| Put-Call Ratio | 0.51 | Bearish Signal |
Somil Mehta, Head of Alternate Research at Mirae Asset Sharekhan, notes that momentum indicators have flashed a negative crossover, confirming the short-term weakness. The breach of the 50-day EMA marks the first such occurrence in over three months, representing a significant bearish shift in trend.
Market Structure Deteriorates
Rupak De, Senior Technical Analyst at LKP Securities, highlights that the index has slipped below its rising trendline, indicating rising bearish sentiment across the market. The India VIX has spiked sharply, moving above its 50-day EMA at 10.6, reflecting heightened investor anxiety and increased volatility expectations.
Dhupesh Dhameja, Research Analyst at Samco Securities, points out that the market structure has weakened significantly. The index has closed below the previous day's high for five straight sessions, with every intraday recovery facing swift selling pressure.
Critical Support and Resistance Zones
Analysts have identified key levels that will determine the index's near-term direction:
| Zone Type | Level Range | Significance |
|---|---|---|
| Immediate Support | 25,600 | Make-or-break zone with EMA convergence |
| Downside Target | 25,300-25,350 | Primary bearish objective |
| Resistance | 25,900-26,100 | Critical breakout level for bullish revival |
| Strong Resistance | 26,100+ | Decisive level for sentiment stabilization |
The 25,600 level represents a crucial make-or-break zone where the 20-week EMA and 100-day EMA converge. A sustained breach of this level could accelerate the decline toward 25,350.
Trading Strategies and Recommendations
Given the current technical setup, analysts recommend adopting a cautious approach:
Nifty Strategy:
- Sell on bounce toward 26,000 with targets of 25,800 and 25,300
- Stop loss at 26,200
- Avoid fresh long positions until DEMA crossover reversal
Bank Nifty Approach:
- Dark cloud cover pattern formed on weekly chart
- Sell below 59,150 targeting 58,800
- Stop loss above 59,300
Options Strategy: For options traders, a bear call spread strategy is recommended by selling the 25,500 CE and buying the 25,750 CE of the January 20 expiry to benefit from overhead resistance with limited risk.
Individual Stock Recommendations
Analysts have identified specific trading opportunities in individual stocks:
Bearish Picks:
- LIC: Sell at ₹830, target ₹750, stop loss ₹860
- CAMS: Sell at ₹727, target ₹650, stop loss ₹760
- Hindustan Zinc: Sell below ₹606, target ₹585, stop loss ₹615
Bullish Opportunities:
- Emcure Pharmaceuticals: Buy at ₹1,541, target ₹1,660, stop loss ₹1,494
- The Ramco Cements: Buy at ₹1,093.80, target ₹1,200, stop loss ₹1,035
- Endurance Technologies: Buy at ₹2,622, target ₹2,810, stop loss ₹2,520
Market Outlook
The consensus among technical analysts suggests that the Nifty remains in a bearish phase with limited upside potential until key resistance levels are reclaimed. The persistent selling on intraday recoveries and elevated volatility indicate that market sentiment is unlikely to stabilize unless the index decisively moves back above the 25,900-26,100 resistance band. Until then, a sell-on-rise strategy appears to be the preferred approach for navigating the current market environment.
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