Relentless selling pressure has driven the headline Nifty 50 index to close under its 200-week moving average (WMA) once again, indicating a bearish sentiment among market participants.
The index closed at 22,600, under the 200-WMA of 22,673. Usually the level is seen as a strong support and a break-through under this level indicates the likelihood of further selling, explained an analyst at a prop-trading firm who wished to remain unnamed.
Market internals continue to deteriorate, with the Nifty 500/Nifty 50 ratio testing five-month support. "Client net stock futures longs have eased to a 1.5-month low but remain elevated historically, leaving scope for further unwinding," said Kruti Shah, Quant Analyst, Equirus Securities.
The Nifty has struggled to move above 22,786 over the past two days, said Chandan Taparia, Head of Derivatives & Technical Research at Motilal Oswal. "There is put open interest at 22,500, but some traders may be buying puts for hedging purposes. A sustained move below 22,500 could trigger a fresh sell-off and another leg of downside."
Shah sees the support even lower than 22,500, saying the near-term bias remains defensive, with 22,000–22,200 as an immediate support zone and 23,000 as resistance. "A sustained recovery will require stabilisation in positioning and broader-market participation."