NIFTY Index Chart Analysis

The Nifty 50 extended its losing streak to seven consecutive weeks last week, marking its longest weekly decline since the Covid-19 market crash. The weakness continued into Monday’s session, with the index falling more than 1.5 per cent and slipping to its lowest level in nearly six months.[EasyDNNnews:PaidContentStart]

The decline was broad-based, with most sectors ending in the red. The immediate trigger for the sell-off was the sharp rise in crude oil prices, which crossed USD 108 per barrel after the US rejected Iran’s peace proposal. Adding to the pressure, higher US bond yields have reduced the relative attractiveness of emerging markets, including India. Rising yields generally increase the appeal of US fixed-income assets and can influence global fund flows towards safer alternatives.

The Nifty 50 has corrected more than 8 per cent from its recent swing high of August 3. The index is currently trading below all its major moving averages, including the 20-day, 50-day, 100-day and 200-day moving averages. It is trading around 2.84 per cent below its 20-DMA and approximately 4.94 per cent below its 50-DMA, highlighting the prevailing weakness. Any recovery attempt so far has faced selling pressure, indicating that traders are using pullbacks to exit positions. The failure of the index to sustain above the 50 per cent retracement level of the during the recent suggests that recovery attempts have remained weak and lacked follow-through. The broader market, which had shown relative strength until August, has also witnessed a sharp deterioration in September. The Nifty Midcap 100 index has declined around 6.71 per cent so far this month and is now trading below its short-, medium- and long-term moving averages. The Nifty Smallcap 100 index has seen a comparatively moderate decline. While it has slipped below its 20-DMA and 50-DMA, it continues to trade above its 100-DMA and 200-DMA, indicating relatively better resilience compared with the midcap segment.

However, the overall market breadth has weakened significantly. In the Nifty 50 universe, 36 stocks are currently trading below their 200-DMA, meaning more than 70 per cent of the index constituents are below their long-term average. A similar trend is visible in the broader Nifty 500 index, where 276 stocks are trading below their 200-DMA. At the beginning of September, this number was around 200, highlighting the broad-based deterioration in market participation.

The 14-period RSI on the daily chart stands at 27.69, placing it in the oversold zone. The RSI has also shifted into a super bearish range, as every pullback attempt has failed to push the indicator above the 40 level. On the weekly timeframe, the RSI is positioned near 34, reflecting sustained weakness. The MACD remains bearish across multiple timeframes, while the ADX reading of 33.57 indicates that the ongoing downtrend continues to have strength.

The Nifty has witnessed a breakdown of important support levels amid rising volatility and weakening market breadth. The crucial support now stands near the 200-week moving average, currently placed around 22,606. A sustained move below this level could open the possibility of further weakness towards the 22,000 mark.

On the upside, the earlier support zone of 23,000–23,070 is likely to act as a resistance zone due to the change in polarity principle. A decisive recovery above this range would be required to improve the near-term setup. Above this, the next important hurdle remains near the 20-DMA, currently placed around 23,448.

For now, the market remains under pressure, and traders will closely track whether the Nifty manages to hold the 22,600 zone or witnesses further downside.

STOCK RECOMMENDATIONS

DR. REDDY’S LABORATORIES LTD. ............ BUY ..................... CMP ₹1,222.50
BSE Code : 500124
Target 1 .... ₹1,275 
Target 2 ..... ₹1,310
Stoploss....₹1,171 (CLS)

Dr. Reddy’s Laboratories Ltd. is a Hyderabad-based global pharmaceutical company with a diversified presence across APIs, generic medicines, branded generics, biosimilars and over-the-counter (OTC) products. The company operates across key therapeutic segments, including gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Its major markets include the United States, India, Russia and CIS countries, China, Brazil and Europe.

From a technical perspective, the stock has successfully broken out of a double bottom formation after multiple attempts, with the latest breakout supported by significantly higher volumes, indicating stronger buying participation. The stock is trading approximately 3.84 per cent above its 50-DMA, while the moving average ribbon has turned upwards, indicating improvement in the overall trend structure. Momentum indicators are also supporting the positive setup. The weekly MACD is close to generating a fresh bullish crossover, while the daily MACD continues to remain in bullish territory. The RSI is placed in the strong bullish zone.

Overall, Dr. Reddy’s Laboratories has delivered a bullish breakout despite weak market conditions, reflecting relative strength in the stock. A sustained move above ₹1,220 could open the possibility of an upside towards ₹1,275–1,310. Traders can maintain a stop-loss at ₹1,171.

HBL ENGINEERING LTD. .......................... BUY ......................... CMP ₹785.70
BSE Code : 517271
Target 1 ...... ₹840 
Target 2 ..... ₹865 
Stoploss.....₹745 (CLS)

HBL Engineering Ltd. (formerly known as HBL Power Systems Ltd.) is an India-based specialised engineering company involved in the design, development and manufacturing of technology-intensive products and solutions. The company caters to critical sectors such as Defence, Railways and industrial applications. It focuses on developing products that address technology requirements in India, including advanced battery solutions and specialised electronic systems.

On the technical front, the stock has witnessed a breakout from a downward-sloping trendline formed by connecting the highs of November 2025, May 2026 and June 2026. The breakout was accompanied by a strong bullish candle on the weekly chart, indicating increased buying interest.

On the daily timeframe, the stock is trading above its key short-, medium- and long-term moving averages, reflecting improvement in the overall trend. The 14-period RSI remains in bullish territory, while the daily MACD continues to move higher and is trading above its signal line, confirming positive momentum. Considering the positive technical setup and improving momentum indicators, the stock appears favourable from a trading perspective. A buy position can be considered with a stop-loss of ₹745, while the stock has the potential to move towards ₹840–865.

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