Nifty Faces Its Worst Week – Can the Bulls Regain Ground?
StockEdge's Morning Market Update - 23rd Dec
The Nifty 50 lost 364 points on Friday and a staggering 1,181 points over the week, closing at 23,587. It was the worst-performing week, with the index shedding 4% in just five trading sessions. The bearish momentum was relentless, sparing no sector. A gap-down opening last week set the tone for follow-up selling, which intensified as the week progressed, culminating in a free fall on Friday.
The Metal and PSE indices were the hardest hit, each losing over 7% last week. The primary driver behind this sell-off was the surging Dollar Index, which has gained nearly 8% since October 24 and now trades around 108 levels. While geopolitical tensions and the Fed's policies have added to the bearish sentiment, the Dollar Index's strength has been the key factor exacerbating the market's decline.
Technical Analysis: On the weekly charts, the Nifty has formed a bearish Marubozu candle. The index now trades below its short-term moving averages and, crucially, has closed below the 200 EMA. From a medium-term perspective, Dow Theory signals a lower top, confirming the downtrend.
The fall, which began on October 24, saw a retracement of 50% before renewed selling pressure took over. The critical support level at 24,300 was breached, accelerating bearish momentum. With 23,900 acting as the last hope, its breakdown triggered widespread pressure across all sectors.
The Nifty is clearly weak in the short term, with the November low of 23,300 now in focus. Resistance levels have shifted, with 23,850 acting as immediate resistance and the 24,150–24,200 zone serving as a near-term ceiling.
Market Outlook: Given the massive sell-off last week, the final trading week of December might see some slowdown. The index could oscillate between 23,300 and 24,200 for a while. The market breadth is heavily oversold, with current breadth figures at their lowest in three months for the Nifty.
Conclusion: Keep a close watch on the Dollar Index. The short-term market trend remains bearish, so adopt a "Sell-on-Rise" strategy. For long positions, exercise extreme caution and limit your position sizing to 25%, as the broader trend remains unsupportive.
Levels:
Nifty:
Bank Nifty:
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