Market crash: Sensex staring at another 3,000-pt fall, technical charts say

Charts suggest that the Sensex could slide down to 72,000 levels, in the worst-case scenario, wiping out all the gains made thus far in calendar year 2024 (CY24).

The markets started November on a somber note with the S&P BSE Sensex slipping nearly 1,500 points in intra-day deals to hit a low of 78,233 levels. If technical analysts are to be believed, the index has more room for a slide down to 72,000 levels in the worst-case scenario, wiping out all the gains made thus far in calendar year 2024 (CY24).

 

Technically, the BSE Sensex seems on course to test support at 78,120 levels, which was the R1 (Resistance 1) at the start of the calendar year 2024 (CY24). This resistance level is now likely to act as a support. 

 

 

In case the R1 support fails to hold, the Sensex may slide towards 72,200 levels, with interim support likely around 75,900 levels, charts suggest. However, there can be intermediate bouts of recovery, which analysts expect to be met with selling.

 

Going ahead, the upside for the Sensex for the rest of the calendar year is likely to be capped around 81,750 levels, analysts said, with key resistance seen around the psychological 80,000-mark.

 

 

Meanwhile, the NSE benchmark, Nifty 50 index seems on course to test its 200-DMA (Daily Moving Average), which now stands at 24,450, below which, an extended fall towards 22,900 levels seems likely. This is the 38.2 per cent retracement of the earlier bull-run starting from April 2023 to its summit in September 2024.

 

In the worst case scenario, the Nifty could slide all the way to 20,850 levels – and complete a 61.8 per cent retracement of the earlier rally. In case of a pull-back, the 100-DMA, which now coincides with the 20-DMA, at 24,675 level is likely to act as a stiff resistance. The upside for the Nifty seems capped around 24,950 levels. 

 

“The Nifty had seen a strong up move from 19,200 levels to 26,200 mark without any serious correction, which seems to be setting in now. For the index, the 23,500 mark – its 200-exponential moving average (EMA) – is an important level to track. A failure to hold this can drag the index to 22,500 levels, which would indicate a trend reversal for sure,” said Ajit Mishra – senior vice-president for research at Religare Broking. 

 

From its 52-week high of 85978.25 levels hit on September 27, 2024, the index has lost nearly 7,300 points, or 8.5 per cent and is on the cusp of being in a ‘correction’ mode. Typically, an index or a stock is said to be in such a phase in case of a fall of 10 per cent from its recent peak.

 

In October, the Sensex lost 4,911 points, or 5.8 per cent, and carried this nervousness in the month of November as rising geopolitical tensions in West Asia, nervousness ahead of US presidential poll outcome, policy actions of the global central banks and disappointment in corporate results and the ensuing commentary / guidance given by select companies back home for the quarters ahead dampened sentiment.

 

 

“We think that this is something that the equity market hasn’t really fully priced in yet (as regards US election outcome) in terms of the risk. If anything, given the way the betting odds and different polling data has moved, markets have been faster to re-price upside than potential downside from broad-based tariffs in ‘Red Sweep’ or ‘Red Divided Government’ scenarios,” wrote Kamal Tamboli, US Equity Strategist at JP Morgan in a recent note.

 

Market strategy

 

While domestic growth is slowing, India, according to Rahul Arora, chief executive officer for institutional equities at Nirmal Bang, will likely still be the fastest growing large economy, and hence it is unlikely to underperform other emerging markets.

 

“Recoveries in a market flush with liquidity are likely to be swift. We have been recommending accumulating good franchises with strong fundamentals on dips and suggest keeping some dry powder to deploy at favourable price points; but cash levels shouldn’t exceed 5-7 per cent,” he said.