The Nifty 50 extended its decline for the second consecutive session on Thursday, ending the day at its lowest point. The index gave up more than 200 points from the intraday high, with the decline appearing sharper due to the impact of the Closing Auction Session (CAS).
For the second session in a row, the CAS mechanism resulted in a downward adjustment in the final closing level of the index. Since the introduction of CAS on August 3, the Nifty has declined 683 points from its recent high.
Nifty Recorded Highest Volume in Last 11 Trading Sessions
Thursday’s fall pushed the Nifty to its lowest closing level in the past six trading sessions. The index also witnessed elevated volumes over the last 11 trading sessions, leading to the formation of a distribution day, which indicates increased selling activity.
The index has now closed decisively below its 50-DMA.
Momentum indicators have also weakened. The MACD line continues to trade below the zero line, while the 14-period daily RSI has slipped below 45 and is moving closer to an important support zone. This suggests that the earlier recovery momentum has lost strength.
The counter-trend bounce that began from the August 19 low failed to sustain higher levels and halted between the 38% and 50% Fibonacci retracement levels of the recent decline. Additionally, the index has broken below its rising trendline support, indicating caution among market participants.
Heavyweights Drag Index Lower
The weakness in key index constituents, particularly HDFC Bank and Reliance Industries, contributed significantly to Thursday’s decline. Together, these two heavyweight stocks pulled the Nifty down by nearly 78 points.
The inability of the index to hold short-term recoveries indicates that selling pressure remains active at higher levels. Every attempt of a rebound has so far faced resistance, keeping the broader trend under pressure.
Key Support and Resistance Levels for Nifty
Going ahead, the 24,000–24,040 zone will remain an important support area for the Nifty. A weekly close below the 24,000 mark could further weaken the technical setup and open the possibility of a move towards the 23,892–23,824 range. This zone corresponds to the gap area formed on July 27.
On the higher side, the 24,270–24,300 range will act as the immediate hurdle. A sustained move above this zone could push the index towards the next resistance level at 24,385, where the 20-DMA is positioned.
For the short-term trend to improve, the Nifty needs to reclaim and sustain above the 20-DMA near 24,385. Until then, the index is likely to remain vulnerable to further volatility.
Stock to Watch: Bharat Heavy Electricals (BHEL)
BHEL witnessed a breakout from a triangular pattern on Thursday, forming a strong bullish candle along with above-average volumes, indicating increased buying interest. The stock is currently trading above its key moving averages, like the 20, 50, 100 and 200-DMA, reflecting strength in the overall trend.
The 14-period daily RSI has moved into bullish territory, while the daily MACD has generated a positive crossover, further supporting the improving technical setup.
A sustained move above the ₹434.5–435 zone would keep the positive bias intact and may open the possibility of an upside towards ₹450, followed by ₹458. Traders can maintain a stop loss at ₹418 to manage risk.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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