Nifty Cracks 23,000 In Intraday For First Time Since June; What Is The Next Key Support For Benchmark?

Nifty 50, the NSE-backed benchmark, witnessed huge selling pressure on Tuesday, January 21, after Donald Trump's inauguration. The intense bearish trend pushed the Nifty to crack below the 23,000 mark and hit an intraday low of 22,976.85. The index's outlook is slippery and is expected to find support around 22,500 and resistance around 23,300 ahead.

In an intraday trade, Nifty broke apart and breached its 23,000 support level, by hitting the day's low of 22,976.85 on January 21. The benchmark ended at 23,024.65, lower by 320.10 points or 1.4%. Of the total 50 scrips listed on Nifty, 41 stocks declined and only 9 stocks advanced with 1 unchanged.

Top Bulls: Apollo Hospital, Tata Consumer, BPCL, Shriram, and JSW Steel are the top bulls of the day with gains of 0.5% to 2.13%.

Top Bears: Trent, NTPC, Adani Ports, ICICI Bank and Adani Enterprises were top underperformers, with a decline of 2.8% to 6%.

On NSE, overall, from the total 2,887 stocks traded, about 2,095 stocks declined and merely 715 stocks advanced. The remaining 77 stocks were unchanged. India's volatility index surged by 4%.

While Nifty Midcap 100 and Nifty Smallcap 100 indexes dropped by 2.3% each. All sectoral indices were in red. Bank Nifty, Nifty Auto, Nifty Financial, Nifty Media, Nifty IT, Nifty Metals, Nifty PSU Bank, Nifty Private Bank, and Nifty Oil & Gas were down by 1% to 2%. The worst performers were the Nifty Consumer Durables and Nifty Realty indexes which plunged by more than 4%.

Vatsal Bhuva, Technical Analyst at LKP Securities said, on Tuesday, Nifty opened on a positive note but faced selling pressure near its 14-day EMA, closing with a long bearish candlestick just above the key support of 23,000 and below its consolidation range.

Meanwhile, Dr Ravi Singh, SVP - of Retail Research, at Religare Broking added, "Market sentiment turned cautious after U.S. President Donald Trump announced trade tariffs on neighbouring countries, creating uncertainty around global trade dynamics. This move fueled concerns over potential disruptions in international trade, leading to a pullback in domestic equities."

Where is Nifty Headed?

Hardik Matalia, Derivative Analyst at Choice Broking said, on the daily chart, the Nifty index formed a strong bearish engulfing candle, reflecting significant selling pressure from higher levels following a gap-up opening. This pattern indicates the potential for continued bearish momentum, particularly if key support levels are breached. The index failed to sustain higher levels and closed near the 23,000 mark, signalling caution. A breakdown below this support could trigger extended selling pressure, potentially dragging the index toward the 22,800-22,500 range. On the upside, immediate resistance is seen at 23,300, followed by a critical hurdle near 23,500. A sustained close above these resistance levels would be essential to negate the prevailing bearish sentiment and confirm a bullish reversal. Given the heightened market volatility, traders are advised to remain cautious and implement strict stop-loss measures to protect their capital. Avoiding overnight long positions until the index decisively trades above the 23,500 mark is recommended to manage risks effectively in the current market environment.

Matalia added that the India VIX surged 3.90% to 17.0550, reflecting heightened market volatility and increased uncertainty among participants, signaling the potential for larger price swings in the near term. Open Interest (OI) data indicates the highest OI on the call side at the 23,200 and 23,300 strike prices, highlighting strong resistance levels. On the put side, OI is concentrated at the 23,000 and 22,800 strike prices, marking these as key support levels.

Furthermore, Bhuva said, the RSI, currently at 36 and in bearish crossover, indicates a bearish trend, suggesting room for further downside before entering the oversold zone and solidifying bearish dominance. Selling pressure continues to limit recoveries, and the follow-up move will be key to confirming further downside. A close below 23,000 could push the index toward pre-election levels of 22,500, with immediate resistance at 23,300. Until Nifty closes above 23,500, a sell-on-rise strategy is recommended.