Technical View: 23,200 crucial support for Nifty; break below may resume corrective trend

As per the latest business developments, The key market indices The two key benchmark indices settled softer on Tuesday, dragged by IT, financials and capital goods stocks.

The Sensex declined 329.91 points, or 0.44 percent to settle at 74,529.08. Through the session, it declined 435.28 points, or 0.58 percent to 74,423.71.

The Nifty dipped 85.30 points, or 0.36 percent to end at 23,329.

Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities, stated the 23,450-23,500 zone is likely to act as an important resistance area for the index.

"A sustained move above 23,500 could extend the ongoing pullback surge towards the 23,650 mark in the short term. On the downside, the 23,230-23,200 zone will serve as a crucial backing area. A breach below 23,200 could weaken the near-term structure and may result in the index resuming its corrective trend," Shah stated.

Ponmudi R, CEO of Enrich Money, a SEBI-registered online trading and wealth tech firm, stated the Nifty 50 closed softer, snapping its four-day winning streak.

After opening on a steady note, the index advanced to an intraday high of 23,489 before selling pressure emerged at elevated marks. The slide pushed Nifty towards the 23,300-23,280 zone, where buying interest helped the index recover towards 23,400. That stated, renewed selling at elevated marks capped the recovery and dragged the index softer into the close, highlighting continued supply at elevated marks.

Immediate resistance stays at 23,400-23,500, while 23,300 is the immediate backing, followed by 23,200, Ponmudi stated.

A decisive break below 23,300 could intensify selling pressure and expose the index to the 23,200 zone. The RSI stays weak in the mid-30s, indicating subdued momentum, while the MACD histogram reveals some easing in selling pressure but stays in negative territory, keeping the short-term momentum wary.

"Overall, the near-term setup stays wary below 23,500, with 23,300-23,200 forming the key downside backing zone," Ponmudi stated.

In the meantime, Bank Nifty ended softer, snapping its two-day winning streak and giving back most of the upside from the previous two sessions.

Ponmudi R noted that the index remained capped by the 56,700-56,800 resistance zone and formed a gradual sequence of softer highs and softer lows. Buying interest emerged in the latter half around the 56,100-56,000 backing region, but the recovery failed to sustain its highs, with the index settling near 56,215.

On the upside, immediate resistance is placed at 56,700-56,800, while a sustained move above 57,000 would be required to improve the broader near-term structure.

On the downside, immediate backing lies at 56,100-56,000. A failure to sustain this zone could extend the softness towards the next backing at 55,800-55,700, it further noted.

Momentum indicators stay bearish, with the RSI at 41 and below the neutral 50 mark. The MACD additionally stays firmly bearish, with the MACD line below the signal line and the histogram in negative territory, confirming persistent downside momentum, he stated.

In the meantime, global cues remained mixed. Brent crude eased around 1.5 percent to USD 98.9 per barrel, extending its recent slide amid hopes of progress on US-Iran tensions and a possible reopening of the Strait of Hormuz.