The Nifty 50 ended at a two-month low on Monday after geopolitical tensions involving Iran, Israel and the US weighed on sentiment and triggered broad-based selling.
The index opened nearly 280 points lower before recovering part of its losses. However, selling pressure returned during the second half of the session, pulling the benchmark down more than 1% to close at 23,123.
The decline comes ahead of Tuesday's weekly expiry, with technical indicators and derivatives data suggesting traders remain cautious despite signs of stretched price action.
Selling Pressure Returns
The day's price action formed a small-bodied candle with a long upper shadow, indicating selling emerged at higher levels.
Trading volumes were slightly higher than the previous session, resulting in a distribution day as the index declined more than 1% on increased turnover.
Technical Setup Weakens
The Nifty closed below the lower Bollinger Band, indicating near-term weakness.
The benchmark is also trading 2.37% below its 50-day moving average. While the moving average remains broadly flat, a sustained decline could increase downside pressure if the trend begins to weaken further.
Breadth Remains Negative
Market breadth remained weak across both benchmark constituents and the broader market.
Open-interest data pointed to fresh short build-up, while heavyweight stocks including Reliance Industries, HDFC Bank and Larsen & Toubro together contributed more than 92 points to the index's decline.
Momentum Indicators
Momentum indicators continue to favour the bears.
The MACD histogram showed increasing downside momentum, while the 14-day RSI slipped below 40 and closed at its lowest level since April 1.
The negative directional indicator remained above the positive directional indicator, while a rising ADX suggested the prevailing downtrend was strengthening.
Key Levels For Expiry
The Nifty has formed a fresh lower low, keeping the near-term market structure weak.
Immediate support is placed in the 23,000-23,100 zone. A sustained move below this range could expose the index to further downside towards 22,700 and 22,550.
On the upside, the benchmark needs to close above the 23,550-23,600 zone to indicate an improvement in near-term sentiment.
Until then, recovery attempts may continue to face selling pressure.
Stock In Focus — Fortis Healthcare
Fortis Healthcare broke out of a 65-day cup-and-handle pattern on strong volumes on Monday.
The stock also closed above the 61.8% retracement level of its previous decline, while the relative-strength line moved to a new high, indicating outperformance against the broader market.
Fortis remains above its key moving averages and trades 9.86% above its 50-day moving average.
The Bollinger Bands have widened across multiple time frames, suggesting an increase in momentum. The MACD is nearing a fresh positive crossover, while the 14-day RSI and Stochastic RSI have generated positive signals.
A sustained move above the Rs 993-995 zone would keep the technical structure constructive, with the next resistance area placed near Rs 1,095-1,105. Immediate support is seen at Rs 952.
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