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In a note, Balanco said that the lack of follow through buying in December left the Nifty oscillating around its 200-Day Moving Average and threatening the support around November lows of 23,263.
“A break below 23,263 – 23,460 support will be a bearish signal. Such a move would support a downside target of 22,000,” Balanco wrote in his note.
The Nifty 50 broke below the November lows on Monday in a 350-point drop, that resulted in a test of the 23,000 mark on the downside, although the index managed to close above that level.
The GIFT Nifty too is pointing to a gap up start this morning, but similar to last week, the Nifty had gained on Tuesday before selling off through the rest of the week.
Aside of the Nifty, Balanco sees further downside on the Nifty Bank as well, stating that the banking index’s price action is a concern for the broader market. Last Friday’s close also resulted in the Nifty Bank breaking down from the June 2024 – January 2025 trading range.
“This breakdown supports a downside target of 45,000, some 7% downside,” Balanco said.
The Nifty Bank fell another 700 points on Monday, closing just above the mark of 48,000. The index has now corrected over 6,000 points from the previous record high level of 54,467.
