Nifty falls for third straight session; More pain ahead or relief rally on the cards?

The Nifty 50 extended its decline for the third consecutive trading session on Wednesday, falling 203.60 points or 0.86% to close at 23,431.50. The index ended the session at its lowest level since June 11.

The index started the session on a weak note, opening nearly 113 points lower. Although it attempted a recovery during the first half of the trading session, selling pressure returned in the afternoon. From the day’s high of 23,571.55, the index slipped nearly 140 points and closed near the day’s low.

Nifty Continues to Form Lower Highs and Lower Lows

The daily chart formed a sizeable bearish candle with a lower high and lower low formation, along with a downside gap. The continued selling pressure pushed the index below the important support zone of 23,600.

From the August 26 high, the Nifty has declined 947.10 points or 3.88%. It is currently trading 2.66% below its 20-DMA, indicating weakness in the short-term trend.

The index also closed below the lower Bollinger Band and 8-EMA, suggesting that the price has moved far, too fast. This increases the possibility of a short-term mean reversion in the coming sessions.

RSI Indicates Oversold Conditions

Momentum indicators continue to show selling pressure. The RSI stands at 26.44, indicating an oversold condition, although such readings can remain in place during a strong downtrend. Meanwhile, the MACD histogram has shown further expansion in negative momentum, highlighting continued weakness.

Can Nifty Stage a Recovery After Entering Oversold Territory?

After the sharp decline and close below the lower Bollinger Band, the possibility of a technical bounce cannot be ruled out. However, a sustainable reversal would require the index to close above the September 9 opening gap zone, placed between 23,572 and 23,623.

A move above this zone could provide some relief, with the 8-EMA at 23,788 acting as the next immediate resistance level.

On the downside, immediate support levels are placed at 23,311 and 23,172.

For any recovery attempt to gain strength, the index needs to sustain above key resistance levels for at least 2–3 trading sessions. At present, the overall trend remains weak, with the index continuing to form lower highs and lower lows. Until this structure changes, traders should avoid aggressive long positions and remain cautious on any pullback.

Stock to Watch: Apollo Hospitals Enterprise

Apollo Hospitals Enterprise has witnessed a bullish breakout after moving above the upper boundary of a symmetrical triangle pattern. The stock has also surpassed its previous minor highs and closed above the three-week tight consolidation zone, indicating renewed buying interest.

The breakout has been supported by strong volumes, which have remained elevated over the past three trading sessions. The stock’s Relative Strength (RS) line has moved to a new high, highlighting its outperformance compared with the broader market and other listed stocks.

Currently, the stock is trading about 1% below its all-time high, while all major short-term and long-term moving averages are trending upward, confirming a strong bullish structure. The Bollinger Bands have started expanding, indicating a rise in volatility with a positive bias, while the moving average ribbon continues to point higher.

Momentum indicators are also supporting the bullish view. The MACD has generated a fresh bullish crossover, while the KST and Stochastic RSI indicators remain in positive territory. The Elder Impulse System has formed strong bullish bars across all time frames, further strengthening the positive setup.

Overall, Apollo Hospitals has registered a strong technical breakout. A sustained move above ₹8,992 could drive the stock towards ₹9,200. Traders can maintain a stop loss at ₹8,770. A decisive breakout above ₹9,200 may open the possibility of further upside towards ₹9,300.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.