Benchmark indices Sensex and Nifty fell about 1.5 per cent each on Friday, the day of expiry of November futures and options contracts. Analysts said the indices failed to move past their immediate resistance levels and have breached a key short-term moving average on the lower side.
Shrikant Chouhan, Head Equity Research, Kotak Securities believes the current market texture is weak and a technical bounceback is possible only after a dismissal of 24,000 on Nifty and 79,200 on Sensex or 20-day SMA (Simple Moving Average).
"Below 20-day SMA or 24,000 on Nifty/79,200 on Sensex, the market is likely to retest the levels of 23,850-23,750/78,500-78,200. On the flip side, Above 24,000/79,200, these indices could bounce back till 24,150-24,175/79,500-79,800," Chouhan said.
Sensex closed the day at 79,043.74, down 1,190.34 points or 1.48 per cent. Nifty settled the day at 23,914.15, down 360.75 points or 1.49 per cent.
"Despite the bullish start, Nifty struggled around the 24,350 level for the last four sessions, with each day's high hovering near this resistance zone. Today, the bears took control by midday triggering strong selling pressure. Every minor bounce was met with renewed selling as the index failed to break above the crucial resistance. On the weekly chart, nifty formed another bearish candle, signalling that further downside pressure could emerge if the index fails to reclaim key resistance levels," said Chandan Taparia, Head, Equity Derivatives & Technicals, Wealth Management, MOFSL.
Rupak De, Senior Technical Analyst at LKP Securities said Nifty has fallen below the crucial support level of 23,940. The sentiment looks weak, and further weakness seems possible from here, he said. "On the daily chart, the index has closed a gap it created recently. In the short term, if the Nifty falls below 23,870, it might continue declining toward 23,500. However, if it sustains above 23,870 and does not make a lower low, it could witness a sharp recovery toward 24,200 and higher," he said.
Jatin Gedia – Technical Research Analyst at Mirae Asset Sharekhan said the Nifty's consolidation of the last three trading sessions has broken down and filled the gap area formed on the November 25 between 23,950 and 24,150. Gedia said crucial retracement levels are placed at 23,935–23.807, which are likely to act as a strong support zone and a potentially an uptrend resumption zone.
"Overall, the trend remains positive, and we expect the Nifty to resume its upmove towards 24,400," he said.
Ajit Mishra – SVP, Research, Religare Broking said Nifty struggled to breach the key resistance at 24,350 and slipped below its 20 DEMA, filling the gap on the daily chart. This suggests a likely consolidation phase ahead. Traders are advised to remain cautious and focus on stock-specific opportunities until a clearer trend emerges," he said.