Iran-Israel war: NSE Nifty index nears 100-DMA; Key levels to watch out for

The NSE Nifty 50 is seen quoting close to its 100-DMA for the first time in six months amid the rising geopolitical tensions in the Middle East. Here's what the Nifty chart suggests.

The NSE Nifty 50 plunged 1 per cent or 218 points to 21,778 in Friday's intra-day deals following a sell-off in Asian markets on reports of multiple explosions in Iran, amid the Israel retaliation threat. Markets across the globe have witnessed a steep fall this week after Iran's drones and missiles strike on Israel over the weekend.

Even as the Iran attacked was thwarted with help of Israel allies - the US and UK, Israel has vowed to take revenge and attack Iran. On Friday, among key markets in Asia, Nikkei, Taiwan and Kospi tumbled in the range of 2-3 per cent, while Hang Seng slipped 1.4 per cent.

Back to the Indian stock market, the Nifty 50 index is now seen within striking distance of its 100-DMA (Daily Moving Average), which stands at 21,725, for the first time in six months. The NSE Nifty 50 index last closed below the 100-DMA on November 13, 2023. Post the then breakout, the NSE benchmark rallied 17.1 per cent or 3,322 points and hit a record high of 22,776 on April 10, 2024.

That apart, in the last six months, this is just the third occasion wherein the short-term trend turned negative, with the Nifty closing below its 20-DMA for two or more trading days. In the previous two counts, the Nifty had managed to reverse course and scale newer heights in the ensuing 3-4 weeks.

What does the chart suggest now?

Nifty

Current Level: 21,840

Downside Risk: 5.5%

Support: 21,725; 21,250

Resistance: 21,900; 22,250

The NSE Nifty is presently quoting below its 20- and 50-DMAs, which stand at 22,270 and 21,170, respectively. The index is below these averages for the third straight trading session, thus indicating that the near-term bias is now negative. These short-term moving averages are expected to act as hurdles as and when the Nifty attempts a pullback.

On the downside, the 100-DMA at 21,725 needs to be closely monitored, as the index may attempt to consolidate and seek support around this level. CLICK HERE FOR THE CHART

However, in case, the 100-DMA fails to provide support, the next major support stands at 20,625 i.e. the 200-DMA. In the interim, the weekly chart suggests presence of super trend line support around 21,250 levels.

Among the key momentum oscillators, the Slow Stochastic, Directional Index and MACD (Moving Average Convergence-Divergence) have all turned negative on the daily scale, thus suggesting that the bears may have the upper hand for now.

For the trend to turn favourable, the Nifty will need to sustain consistently above 22,250 levels, with near resistance seen around 21,900 levels. 

Sensex

Current Level: 71,950

Downside Risk: 4.3%

Support: 71,500; 71,000

Resistance: 72,700; 73,650; 74,585

The S&P BSE Sensex hit a low of 71,816 in trades today. Given the 4.4 per cent fall from its all-time high of 75,124, the S&P BSE Sensex is seen headed towards crucial support levels amid this corrective move.

The quarterly Fibonacci chart suggests that the Sensex has near support at 71,530 followed by 71,000. Break and sustained trade below the 71,000-mark, opens the door for a decline towards the yearly Fibonacci support at 68,850 levels.

In the near-term, i.e. till June-end, the bias for the Sensex is likely to remain tepid, with upside seen capped around 73,650 and 74,585 levels. Interim resistance for the BSE benchmark Sensex will be seen around 72,700 levels.