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On Thursday, Nifty 50 dropped 0.82% owing to rising US treasury yields triggered by a major US tax and spending bill that sparked global risk aversion. Declines in IT, FMCG, and Reliance stocks, along with technical resistance near 25,000 and a weakening rupee amid foreign outflows, added to the pressure, leading to widespread selling and dampened investor sentiment.





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Both Nifty 50 and Sensex declined around 0.8% on Thursday, tracking a sharp sell-off in global markets. Domestic equities opened lower on weak global cues and remained under sustained pressure throughout the session, with Nifty 50 closing at 24,610. 



On the daily chart, the index formed a bearish candlestick, indicating underlying weakness. However, it found support near its 21-day exponential moving average (21-DEMA) around 24,445. All major sectoral indices ended in the red, and the broader market breadth was negative, with the advance-decline ratio skewing toward decliners at 7:10.



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Nifty 50 closed below 25,000 on Thursday, retesting its 21-day EMA and signaling weakening momentum despite an overall bullish trend. The relative strength index (RSI) has turned downward but remains in bullish territory around 56, reflecting a loss of strength without a complete shift in trend. The MACD has formed a negative crossover on the daily chart, yet continues to stay above the central line, suggesting that the broader uptrend has not been decisively negated.



According to O'Neil’s methodology of market direction, Nifty50 transitioned from a "rally attempt" to a “confirmed uptrend". 



Nifty50 remained under selling pressure throughout the session but found support near the 21-day EMA, rebounding from that level. The 21-EMA, currently around 24,400–24,450, is expected to serve as key immediate support. A break below this zone could trigger further downside toward 24,000. On the upside, resistance is seen near 25,000. Given the current market sentiment and technical setup, the index is likely to trade in a sideways range between 24,400 and 25,000 in the near term.





Nifty Bank opened on a weak note and remained in negative territory for most of the session. It found support near the 21-day EMA and recovered part of its intraday losses before closing 0.24% lower on Thursday. The decline was primarily driven by weakness in ICICI Bank, HDFC Bank, and Axis Bank. 



On the daily chart, the index formed a small bearish candle with a lower-high and lower-low pattern, indicating continued selling pressure. It opened at 54,875, traded within a range of 54,996–54,576, and settled at 54,941. FINNIFTY also declined 0.43%, forming a bearish candle, reflecting broader weakness in the financial space.



The index has been trading sideways over the past few weeks and breached its 21-day DMA on Thursday. The RSI has turned downward and is currently positioned around 56, indicating weakening momentum. A negative crossover in the MACD further suggests deteriorating short-term strength, reinforcing a cautious outlook for the near term.



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According to O'Neil’s methodology of market direction, Nifty Bank has transitioned from an "uptrend under pressure" to a “confirmed uptrend".



The index needs to reclaim and remain above the 21-DMA, currently placed near 55,000, to prevent further downside. A continued breach of this level could trigger additional weakness, potentially dragging the index toward 54,000-53,500. On the upside, resistance is seen at 55,000, followed by 55,500, while immediate support is placed around 54,500.



MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. It offers tools and resources to help investors make informed decisions based on the CAN SLIM methodology, developed by legendary investor William J. O'Neil. You can access a 10-day free trial by registering on its website.



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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

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