The 50-share bluechip index closed at 23,151 — down nearly 500 points — and has now fallen over 10 per cent from its recent high of 25,885, slipping into “correction” territory and breaching key support levels.
Analysts said the sharp correction, combined with weakening momentum indicators and sustained selling in banking stocks, suggests the market could remain skittish in the near term.
Gaurav Udani, founder of Thincredblu Securities, said the broader market backdrop remains fragile. If weakness persists, Nifty could drift toward 22,800-22,700 in the coming sessions, he said, while 23,600-23,700 is likely to act as an immediate resistance band.
“Market sentiment remains cautious as participants are reducing exposure rather than building fresh positions. Traders should avoid trying to catch a falling knife and instead wait for clear signs of bullish strength before initiating long positions,” Udani added.
Sudeep Shah, head of technical and derivatives research at SBI Securities, noted that the recent fall has pushed the Nifty below its 100-week exponential moving average (EMA) for the first time since June 2022 and below the 20-month EMA for the first time since February 2025.
He added that the immediate support lies in the 23,000-22,950 zone, and a sustained break below this could extend the decline toward 22,750 and 22,500 in the short term. On the upside, 23,450-23,500 is likely to act as a strong resistance zone.
A fall to 22,500 levels could imply another 3 per cent fall from the current levels.
Amol Athawale, vice president for technical research at Kotak Securities, said the charts suggest a continuing corrective trend. “On daily charts, the market has formed a pattern of lower highs and lower lows, while the weekly chart has formed a long bearish candle, which is largely negative,” he said.
As long as the index trades below 23,400, the weak formation is likely to persist, with downside targets of 22,800 and potentially 22,600, he added. A move above 23,400 could trigger a pullback toward 23,600-23,800.
CLSA has also warned of sharper downside risks for the market. In a note, the global brokerage has said the latest fall has left the market vulnerable to further weakness and the next chart support is seen only around the 21,777-21,800 levels.
Banking stocks — which carry significant weight in the benchmark indices — have been a key drag on the market. The Nifty Bank index ended at 53,758, down 2.44 per cent in the day and nearly 13 per cent in the past three weeks.
According to Hariprasad K, founder of Livelong Wealth, 53,500 is the immediate support level, coinciding with a previous swing low and a key demand zone. If selling continues, the index could test 53,000.
Shah of SBI Securities noted that the index has closed below its prior swing-low support of 54,227, which had triggered a nearly 14 per cent rally over the following four months last year. Reclaiming the 54,200-54,300 zone will therefore be crucial for any meaningful recovery.
Athawale added that 54,500 remains the key level to watch for the Nifty Bank index in the near term. Below this, the index could slip toward 53,000-52,500, while a move above 54,500 may trigger a pullback toward 55,500-55,800.
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