Mumbai, 24 January 2024: Indian equities witnessed a sharp correction on Tuesday, with the benchmark Nifty 50 index plummeting 333 points (1.54%) to settle at 21,238. This decisive fall formed a long “bear candle” on the daily chart, raising concerns among analysts about a potential extension of the bearish trend.
Technical Signal Points to More Weakness:
The bearish engulfing pattern formed on the chart, coupled with the index falling below its 20-day moving average, triggered bearish signals. Experts believe further weakness could be on the horizon.
“The Nifty’s breakdown below the 20-day MA confirms the recent sell-off’s momentum,” said Avinash Gupta, head of technical analysis at XYZ brokerage. “Support levels to watch are around 20,950-20,850, which coincide with previous technical points and could offer temporary reprieve. However, if breached, a decline towards 20,000 cannot be ruled out.”
HDFC Bank Leads Decline:
The financial sector emerged as the major drag on the index, with HDFC Bank tumbling over 3%. Zee Entertainment’s plunge of 32% following the collapse of its merger deal with Sony Pictures India further added to the downward pressure.
Experts Remain Cautious:
While acknowledging the bearish technical picture, some analysts urged caution against excessive pessimism.
“While the immediate outlook seems weak, global cues and domestic developments will play a crucial role in determining the trajectory,” said Vinay Bajaj, market strategist at ABC investment firm. “If positive triggers emerge, we could see a bounce back from support levels. However, sustained weakness below 20,000 could signal a deeper correction.”
Key Takeaways:
- Nifty 50 closed significantly lower on Tuesday, forming a bearish technical pattern.
- Analysts anticipate further weakness in the short term, with support levels around 20,950-20,850 being crucial.
- Global cues and domestic developments will be key factors to watch in the coming days.
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