- Nifty 50 faces short-term pressure amid Middle East geopolitical uncertainty, says Balanco
- Key support zone for Nifty is between 23,700 and 23,800 levels, he adds
- Breaking resistance at 26,277–26,341 is needed to confirm rally continuation, according to Balanco
The Nifty 50 may have faced short-term pressure due to ongoing geopolitical uncertainty, particularly in the Middle East. But there could be a springboard for a massive 40% advance, potentially reaching the 31,700 mark in the long run, provided it maintains a key support level, according to CLSA technical strategist Laurence Balanco.
In a recent technical note, Balanco highlighted that despite the recent market weakness, the benchmark index remains positioned for a structural uptrend. The recent dip has brought the Nifty back toward support established by the early February lows. Balanco noted that a critical "shelf of support" exists in the 23,700–23,800 zone.
"As long as price action holds above the 23,700–23,800 support zone, it ultimately provides the platform for a powerful advance of more than 40%," the note said.
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However, the path to these historic highs requires clearing immediate hurdles. Balanco indicated that a break above the current resistance zone of 26,277–26,341 is necessary to confirm the next leg of the rally. Once this ceiling is breached, the index would target an initial upside of 28,700–28,800, before extending toward the longer-term objective of 31,600–31,700.
In the near term, investors should expect continued volatility. Balanco anticipates ranging action as the index fluctuates between the 24,300–24,500 support and the 26,341 resistance level.
The outlook remains bullish only if the floor holds. Balanco warned that a slide below the 23,700–23,800 support area would be a significant "negative event." Such a breakdown would negate the current "cup-and-handle" consolidation pattern, a technical formation typically used to predict a bullish continuation.
For now, the market's ability to defend the 23,700 level remains the pivot point for CLSA's ambitious long-term forecast.
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