India's stock market is showing early signs of a cyclical bottom, with the Nifty 50 approaching a major support zone and technical indicators suggesting that the recent selloff could be nearing exhaustion, according to CLSA's technical analyst Laurence Balanco.
In his latest technical analysis, Balanco said the combination of major support levels, improving momentum and a potential double-bottom formation warrants a more constructive tactical stance on Indian equities.
The Nifty 50 is attempting to establish a base around 21,700-22,182, which marks the lower boundary of its trading range since 2024. September-October price and momentum divergence suggests that the decline from the August highs is becoming mature and increasingly vulnerable to a reversal.
This could set the stage for another cyclical rally within the broader trading range of 21,700-22,182 on the downside and 26,000-26,300 on the upside, similar to opportunities observed around the March 2025 and April 2026 lows.
Nifty 50: Key Support And Resistance Levels
According to Balanco, the first resistance for the Nifty 50 stands at 23,070. Beyond this, the index faces a crucial resistance zone between 23,654 and 24,183, where its 50-day and 200-day moving averages converge.
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A sustained break above these moving averages would provide stronger confirmation that the market is transitioning from a consolidation phase into a renewed cyclical rally.
The analyst also pointed to a potential double-bottom formation around the July and October relative lows, with additional support from levels last seen in 2020.
India Could Outperform Emerging Markets
Balanco said the emerging technical formation suggests India could also be forming a relative bottom against the broader emerging-market benchmark.
Double-bottom structures in the US-listed India-focused exchange-traded fund (INDA) and its relative performance against the emerging-market benchmark reinforce the possibility of stabilisation in both absolute and relative terms.
CLSA's broader global market assessment highlights the importance of macroeconomic conditions, including inflation, Federal Reserve policy, bond yields, earnings expectations and geopolitical risks, in determining whether a sustained recovery materialises.
For Indian equities, the immediate focus remains on whether the Nifty can hold its major support zone and subsequently overcome resistance around its key moving averages. A successful breakout could strengthen the case for a broader cyclical recovery.
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