Nifty can tumble over 15% from here on if it breaks 17,300, charts suggest

In the interim, the 200-WMA at 16,975 could be another key level to watch out for, as the Nifty had bounced back from there during the correction in the first half of 2022.

The NSE Nifty 50 has declined close to 6.5 per cent to 17,500 levels in the last three months so far amid concerns that a prolonged period of higher interest regime could stifle global economic growth and eventually hit corporate earnings.

Off late, global bankers have stressed on the need for higher rates than earlier projected in the backdrop of stubborn inflation. 

Technically, the Nifty has been trending with a negative bias since the start of 2023, after the short-term (20-DMA) Daily Moving Average dipped below the 50-DMA. To make the case further stronger for the bears, the 20- and the 50-DMA, both, are now down below the 100-DMA following the sharp fall on Wednesday, February 22.

This clearly indicates that the short-term bias for the Nifty is likely to remain bearish as long as the index sustains below the 18,000-mark. Pullback, if any, given the current is expected to counter strong resistance around the 18,200-level – which is the trendline resistance on the daily chart. The near term hurdle for the index will be the 20-DMA at 17,800.

Despite the short-term negative bias, the bulls may not have to worry much as long as the NSE benchmark holds above the 17,300 level. This particular level holds the key for the longer-term directional move on the Nifty, for it coincides with multiple moving averages on various time-frames.

On the daily chart, the 200-DMA which in general is considered as a long-term trend decider stands at 17,355. Similarly, the trendline support on the weekly chart and the 50-WMA (Weekly Moving Average) stand at 17,300 and 17,340, respectively. Further, the 20-MMA (Monthly Moving Average) is also at 17,285.

Thus, there is a reasonable ground to believe that if Nifty breaks and trades consistently below 17,300-level, the longer-term bias could turn bearish and the index may head to lower levels in the ensuing period.

The longer-term chart indicates the possibility of the Nifty falling all the way towards the monthly trendline support at 14,900-level – a downside of over 15 per cent from the current level.

However, in the interim the Nifty could seek support around 16,975 – which is the 200-WMA. During the previous significant market correction, the Nifty had bounced back after testing the 200-WMA in June 2022. The next notable support for the index could be around 15,950, indicates the monthly chart.