Nifty may crash 1,000 pts if it closes below 25,372 today; check strategy

For the Nifty 50 index, 25,100-level shall be the next key level to watch out for. A breach can take it further down.

The Nifty 50 index has shed 3 per cent (786 points) from its October high of 26,104 in the last 11 trading sessions and is now hovering at 25,360 levels on November 7 in intra-day deals.  In the process, the NSE benchmark index is now seen quoting below its short-term moving average - the 20-Day Moving Average (20-DMA) of 25,630 and the super trend line support placed at 25,372 levels on the daily chart. 

  Both these key technical indicators help in determining the short-term trend of an index or underlying stock. The 20-DMA acts as a first line of defense in case of a trend reversal; while the super trend line helps in determining the actual short-term direction.  The fall in the markets in the last few sessions, analysts said, has mostly been on account of weakness in the global markets. Overnight, Wall Street witnessed a broad-based sell-off led by technology and AI-linked stocks — marking one of the steepest declines in recent weeks. Weak US job data, renewed layoffs in the tech sector, and mounting concerns over stretched AI valuations spurred profit booking across growth names.    "Adding to investor anxiety, the ongoing U.S. government shutdown — now entering its second month — has suspended the release of key economic indicators, clouding visibility into the true state of the US economy and complicating the Fed’s policy outlook on the timing and extent of future rate cuts," said a Ponmudi R, CEO of Enrich Money, a SEBI registered online trading and wealth tech firm.  On the technical parameters, meanwhile, Nifty's daily chart shows that the index is hovering near its 20-DMA placed at 25,630 levels and the super trend line hurdle at 25,372 levels. A daily close below the super trend line shall confirm a short-term trend reversal for the Nifty 50 index. 

Here's a detailed outlook on the NSE Nifty 50 index.

Nifty 50

  Current Level: 25,360  Likely Target: 24,400  Downside Risk: 3.8%  Support: 25,372; 25,100  Resistance: 25,630; 25,800; 25,950  In case the Nifty closes below 25,372 on November 7, it shall open the doors for a likely fall towards the 100-DMA, which stands at 25,100 levels, with interim support likely around 25,200 - wherein stands the 50-DMA.  For the Nifty 50 index, 25,100-level shall be the next key level to watch out for, as break and sustained trade below the same can signal the possibility for a bigger correction towards 24,400 levels, suggests the weekly chart. This implies a downside risk of nearly 4 per cent or 1,000 points from here.  On the other hand, in case, the Nifty manages to survive above 25,372, it shall attempt to bounce back and sustain above the 20-DMA in the near-term in order to negate the current tepid sentiment. Above which, resistance for the Nifty can be anticipated around 25,800 and 25,950 levels.  "Roughly one-fourth of small-and midcap stocks (SMC) have corrected very badly and hence, liquidity has become tight for many retail investors, who largely invest in such stocks. Boom in IPOs has also chucked out a lot of liquidity from the markets, which is also impacting the overall sentiment," said G Chokkalingam, founder and head of research at Equinomics Research.