Nifty below 22,850: Where does next support lie for benchmark index? Check key trading levels

New business data points to the fact that Key market indices declined to near six-month lows on Monday, extending a seven-week losing streak, as a climb in crude prices following a deadlock in US-Iran peace talks weighed on investor sentiment.

The deadlock boosted concerns over oil supplies through the key shipping route, pushing Brent crude futures up 2.3% to around $106.7 a barrel.

For India, the world's third-largest crude importer, elevated crude prices risk stoking inflation, widening the import bill and squeezing corporate margins.

At 11:58 am, the Sensex was down 1,010.13 points or 1.37% at 72,885.61, and the Nifty was down 320 points or 1.38% at 22,820.50. Around 1,170 shares advanced, 2,720 shares declined, and 185 shares were unchanged.

With Nifty decisively trading below the pscyhologically important 22,850-mark, where does next backing lie for the benchmark index? Here's what market watchers stated:

"A decisive breach below 23,020 would negate the recovery setup and resume the corrective move towards 22,800–22,700 over the upcoming sessions. For a meaningful pullback, the index needs to establish a sustained Elevated High–Elevated Low formation and reclaim 23,350. A sustained move above this level can signal a pause in the correction and open the upside towards the major resistance zone of 23,500–23,600.

"Key backing is placed at 22,700–22,800, which coincides with the 80% retracement zone of the previous major up move from 22,183 to 24,774," stated Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking.

"Technically, Nifty is witnessing a gradual deterioration in its weekly structure, with the recent breakdown below the 23,070 backing zone weakening the near-term setup. The index is at present trading well below the 50-Week EMA around 24,216, while the 200-Week EMA near 22,380 stays an important long-term backing. A sustained recovery above the immediate resistance band would be required to stabilize the structure and bring back stronger buying interest.

"On the upside, immediate resistance is placed at 23,400 and 23,600. A sustained move above this zone could provide some relief and help the index regain stability. On the downside, backing is noted at 23,000 and 22,800. A decisive breakdown below 22,800–23,000 could further weaken the structure and open room for additional downside. Considering the prevailing technical setup, traders are advised to stay selective and maintain a wary, stock-specific approach until the index establishes a clear directional move," stated Choice Broking.

"On the marks front, 23,000 stays the key backing and a critical level for the bulls to defend. A decisive breakdown below this mark could accelerate the slide toward the 22,800-22,700 zone over the intermediate term. On the upside, the bearish gap around 23,280-23,350 is anticipated to act as an immediate hurdle and may cap any rebound attempt. Beyond this, the sacrosanct resistance zone at 23,500-23,550 stays crucial. Only a decisive and sustained move above this range could signal a meaningful reversal in the prevailing downtrend and offer some respite from the ongoing selling pressure," stated Osho Krishan, Chief Manager – Technical & Derivative Research, Angel One.

"On an immediate basis, the Nifty has backing at 22,800, followed by 22,600, while the corresponding marks for the Sensex are 73,200 and 72,500. A sustained move above 23,300 on the Nifty would be positive and could trigger a recovery towards 23,600. Similarly, a move above 74,500 on the Sensex could backing an upward move towards 75,500.

"The recommended strategy would be to accumulate select stocks in the 22,800–22,600 range on the Nifty and 73,200–72,500 range on the Sensex, while using any recovery towards 23,200–23,300 and 74,200–74,500 to reduce weak long positions," stated Shrikant Chouhan, Head Equity Research, Kotak Securities.