Nifty 50, one of the largest benchmarks of the Indian stock market which represents the 50 largest stocks, has touched below its 200-day exponential moving average (DEMA) support level, hinting at a continued bearish trend ahead. On Wednesday, November 11, Nifty 50 touched 23,509.60, the lowest level of the day, and breached the 200-DEMA of above 23,550. How should investors strategize their investment going ahead?
Nifty Price:
The benchmark dipped by 324.40 points or 1.36% to close at 23,559.05, which is near its 200-DEMA support level, However, during the trading hours, Nifty did break below 200-DEMA to hit an intraday low of 23,509.60.
With that Nifty slipped by 794.75 points or 3.26% on a weekly basis, while its downfall is about 1,568.90 points or 6.24% on a month-on-month basis. Not just that Nifty has nosedived by a whopping 2,718.3 points or 10.3% from its record high of 26,277.35 which was witnessed in late September of this year.
In 30-day performance, Dr Reddy's Laboratories and Reliance stock prices have toppled by 81% and 53.6%, however, their stock prices were adjusted due to bonus issues and stock splits ratio.
Stocks like IndusInd Bank have tumbled by 21.4%, Trent plunged 20.7%, Asian Paints dipped by 18.5%, and Tata Motors, Coal India and Britannia slipped by 16% each. Other stocks to decline in 30 days are Bajaj Auto down by 18.5%, Hero MotoCorp down by 13.7%, Hindalco down 12.81%, Bharat Electronics (BEL) down 12.27%, Kotak Mahindra Bank down 12.4%, and Tata Consumer Products down 13% among others.
Mandar Bhojane, Research Analyst at Choice Broking said, the Nifty has now corrected by 10.53% from its all-time high, losing 2,767 points to close around 23,559-near its 200-day exponential moving average (EMA). This critical level indicates continued bearish pressure, with downside targets potentially extending to 23,200 and 23,000 in the coming sessions. On the flip side, 23,900 and 24,000 levels will act as immediate resistance.
What is the next target for Nifty?
Bhojane added, on the weekly chart, that the 50 EMA around the 23,225 level serves as an immediate support zone, providing potential buy-on-dip opportunities if a reversal pattern is observed. The Relative Strength Index (RSI) is currently at 30 and trending downwards, indicating sustained bearish momentum.
Giving an outlook for both Sensex and Nifty, Shrikant Chouhan, Head Equity Research, Kotak Securities said, for the traders now, 200-day SMA (Simple Moving Average) or 23500/77500 would act as a sacrosanct support zone. Above the same, we could expect one technical bounce back till 23800-23850/78300-78500. On the flip side, a fresh selloff is possible only after the dismissal of 23500/77500. Below which, it could slip till 23380-23350/77200-77000.
Meanwhile, Gaurav Garg, Research Analyst at Lemonn Markets Desk believes Nifty is bouncing off the 200-DMA level. However, additional selling pressure could drive Nifty down further, potentially toward the 22,000 mark.
For November 14th trade, Rupak De, Senior Technical Analyst, LKP Securities said, the index has slipped sharply due to strong selling by major players. The Nifty has fallen toward its 200DMA, breaching the support level at 23800. Immediate support is now at 23500, and a fall below this level could trigger further correction toward 23300-23200. On the higher end, resistance is positioned at 23750.
What Should Traders Do?
According to Choice Broking analysts, market participants, including both long-term and short-term investors, are advised to accumulate quality stocks at lower levels or consider buying on dips with prudent risk management for potential long-term gains.
Ajit Mishra - SVP, of Research, Religare Broking said, that Nifty has now corrected more than 10% from its record high, reaching its major moving average support. Notably, alongside the benchmark index, banking index, midcap and smallcap indices also retested their long-term support levels at the 200 DEMA today. This confluence of support and oversold conditions might trigger a rebound, although any recovery could be limited to select stocks. Traders are advised to monitor positions closely and maintain a hedged strategy.
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