Do technical charts predict more downside for the Nifty? Key levels here

The NSE Nifty on Tuesday, June 04, registered its biggest intra-day fall ever on declining nearly 2,000 points beating the Covid-19 induced panic selling loss of 1,162 points on March 23, 2020.

The NSE Nifty 50 index nose-dived in intra-day trades on Tuesday, June 04, 2024, amid the counting of the Lok Sabha 2024 election votes. In a sudden turn of events from the day earlier, the Nifty cracked 8.5 per cent down nearly 2,000 as it hit a low of 21,281 after actual poll results deferred significantly when compared to the exit poll outcome.

The Nifty had rallied 733 points on Monday, June 03, after exit polls predicted a landslide victory for the Modi-led NDA government, with on an average 350+ seats.

However, as the actual counting took place on Tuesday, as of 13:00 AM, Modi-led NDA front were seen leading in around 300 seats only. Thus, the market sold-off on fears the Modi-government, even as they resume office for the third-term, may not be able to push for reforms so easily.

Amid today's downturn, the Nifty posted its biggest single intra-day loss ever in absolute terms - down 1,983 points. The earlier biggest intra-day loss was 1,162 points on March 23, 2020.

In terms of percentage, the intra-day loss stood at 8.5 per cent. In comparison, there have been 13 occasions since the year 2,000 wherein the Nifty 50 index has tumbled more than 8.5 per cent in intra-day deals.

Nifty

Current Level: 21,840

Downside Risk: 11.4%

Support: 21,080; 20,900

Resistance: 22,165; 22,400

Technically, the Nifty which quoted comfortably above the key moving averages until yesterday, suddenly has broken three of its key moving averages, and also came within striking distance of the long-term (200-DMA - Daily Moving Average) in intra-day trades today.

The NSE Nifty 50 made a low of 21,281 as against the 200-DMA of 21,081. The index presently has recovered partly and quoted at 21,840 levels. Despite that, the index is now seen trading below its 20-, 50- and 100-DMAs, which stand at 22,500, 22,415 and 22,165, respectively.

This is the first-time since mid-November, that the Nifty is seen quoting below 100-DMA. 

In case, the Nifty were to close 21,770 levels, which is the lower-end of the Bollinger Bands o the daily scale, it would indicate further weakness for the market. Wherein, the index may then soon test the 200-DMA. On the other, the Nifty will need to bounce back and sustain consistently above its 100-DMA, in order to revive the market mood. CLICK HERE FOR THE CHART

The medium-term chart suggests the presence of another key support in the form of 50-WMA (Weekly Moving Average) at 20,900 levels. In case, the 20-WMA too fails to hold, the index could then extend the fall towards the 100-WMA, which indicates a target of 19,355 - i.e. a downside risk of 11.4 per cent from present levels.