Nifty crashes 1,000 points below its 200-DMA; analysts see more downside

The ongoing conflict in West Asia triggered a sharp fall in the Nifty 50 index in the last two trading sessions. The index is now trading nearly 1,000-points below its 200-day moving average (DMA) that stands at 25,345 mark - a key technical level it first breached last Friday. If the war prolongs and impacts crude oil prices further, analysts see more pain ahead for the markets.

For now, the 24,000 mark in the Nifty 50 remains an important psychological support level, suggests U R Bhat, co-founder & director, Alphaniti Fintech. If the war intensifies and the countries involved resort to the nuclear warfare, he expects the markets to become a bottomless pit.

"However, I don't see that happening. At best, the countries involved can keep bombing each other, which in turn can drag the markets lower. Any impact on the oil infrastructure in case of a prolonged war could see the Nifty drop to 23,500 - 23,700 levels," Bhat said.

A technical scan on Nifty 50 stocks shows that 29 out of the 50 shares are trading below the 200-DMA. Prominent among these are Infosys, Bharti Airtel, ITC, Hindustan Unilever, Bajaj Finance, HDFC Bank, ICICI Bank, Reliance Industries (RIL) and Eternal to name a few.

Meanwhile, Larsen & Toubro and InterGlobe Aviation (IndiGo) are the two biggest Nifty losers in the last two trading sessions, down around 11 per cent each as compared to the Nifty 50 index, which shed 3.4 per cent during this period, data show

That apart, Adani Ports, Tata Motors PV, Shriram Finance, Asian Paints, Maruti, Reliance, Adani Enterprises, Bajaj Finserv, Tata Steel, JIO Financial, Mahindra & Mahindra, Ultratech Cement, Bajaj Finance and Eicher Motors have dropped 5 - 7 per cent each in the same period.

While a deeper cushion is seen in the 24,200–24,000 zone if panic selling intensifies, momentum indicators remain weak, according to Ponmudi R, CEO of Enrich Money, a SEBI registered online trading and wealth tech firm. The relative strength indicator (RSI) around 36, approaching oversold territory but without any confirmed reversal signals.

"The MACD is firmly negative with a widening histogram, indicating dominant bearish momentum, and prices continue to trade well below all key short-term EMAs. Overall bias remains bearish with elevated downside risk. A sell-on-rise strategy is favoured, while only a sustained move above 25,300 would signal a potential stabilization or improvement in structure, especially amid ongoing geopolitical, oil, and tariff-driven volatility," Ponmudi said.

A trend of all skirmishes over the past 25 years shows that the market has fallen on news of the strike but recovered over the next few months, noted Jyotivardhan Jaipuria, founder & managing director at Valentis Advisors.

"The average drawdown is around 6 per cent and the market recovers to pre-war levels in about 1 month. We would expect a similar sort of move though we keep an eye on oil prices. We are looking to deploy some cash in this correction," Jaipuria said.

Technical view on Sensex, Nifty

On the daily charts, both Nifty 50 and BSE Sensex have broken key support zones with momentum clearly negative and RSI slipping into oversold territory, indicating trend weakness despite chances of a short pullback, says Kunal Kamble, Sr. Technical Research Analyst at Bonanza.

The analyst sees immediate support for the Nifty at 24,200 – 24,000 levles; and warns that a decisive close below 24,000 can open downside towards 23,500 – 23,300.

"For Sensex, immediate support lies at 78,000 – 77,500; sustained trading below 77,500 may drag the index towards 76,000 – 75,500, whereas pullbacks towards 80,000 – 81,000 are likely to face selling pressure," explains Kamble.

The analyst from Bonanza believes that the overall structure shall remain bearish unless these resistance zones are reclaimed convincingly. Kamble expects resistance for the Nifty around 24,600 – 24,900 levels, followed by 25,400.

Echoing a similar negative outlook, Amol Athawale, VP - Technical Research at Kotak Securities highlights that the market is trading significantly below both short-term and medium-term averages, and on daily charts, it appears to be in a weak formation.

"For positional traders, 24,600 would act as a crucial support zone. If the market slips below this level, the correction could continue until 24,300. Further downside may also persist, potentially dragging the index to 24,000," says Athawale.

On the flip side, the analyst sees 25,000 as the crucial resistance zone for the bulls.