Nifty could fall to 23,260 if it fails to reclaim 24,215: Anand James

The Nifty’s struggle to reclaim 24,000 is beginning to look less like a pause and more like a warning signal. After closing below the rising trendline that had supported the index since April, the benchmark now faces the risk of a deeper correction towards 23,260, according to Anand James, chief market strategist at Geojit Investments.

James said 23,800 remains a firm near-term support, but any recovery will need to push the Nifty above 24,215 for the market structure to turn constructive. Until then, attempts to bounce could remain short-lived as traders assess whether the index is entering a wider corrective phase.

Edited excerpts from a chat:


Nifty has repeatedly struggled around 24,000, while 23,800 has emerged as an important support. Is the index forming a wider consolidation range, or is this the early phase of another correction? What levels will confirm the next breakout or breakdown?
What was earlier seen as a consolidation has too many break downs to ignore the prospects of larger crack down. Especially so, as the prices have consecutive days of close last week, below the upward sloping trend line that has been holding price moves since April 2026. Meanwhile, we do see 23800 as a firm support, from where a few upswings could be attempted; such attempts may not evolve into a sustainable uptrend, unless we see a few days of close above the 24215 region. Such a scenario will force us to consider the prospects of a larger down move, with an initial objective of 23260.

Does the relative strength in private banks and financials suggest that banks could lead the next recovery, or is the sector merely seeing short-covering?
The improving relative strength across private banks and financials suggests that the recent upmove is more than just a short-covering bounce. While the initial recovery may have been aided by short covering, the sustained outperformance relative to the broader market points to genuine accumulation. That said, leadership within the space is unlikely to be broad-based, with strength concentrated in select pockets rather than the sector as a whole.

This is evident in the Nifty Financial Services Index and Nifty Private Bank Index, both of which have maintained stable to improving relative strength readings over the past several weeks. Such consistency is typically associated with sustained institutional participation rather than a brief relief rally.

From a technical perspective, the Nifty Private Bank Index continues to display encouraging signs. The index remains within a rising channel, with the RSI holding above 55 and prices attempting to rebound from channel support. It is also inching closer to a breakout above the Supertrend resistance near 28,000, a move that could strengthen the bullish case. However, some caution is warranted.

Read more: F&O Talk: Nifty indicating little evidence of sustained recovery, says Sudeep Shah; outlines BSE, Groww strategy amid CAS

Heavyweights such as HDFC Bank and ICICI Bank are still rebuilding momentum and remain susceptible to intermittent weakness, which could limit the pace of gains. In contrast, Axis Bank, Kotak Mahindra Bank and RBL Bank appear relatively stronger and better positioned for further upside.

The outlook for the Nifty Financial Services Index is more mixed. Last week's hammer candlestick suggests renewed buying interest near support levels, but the weekly MACD remains close to a bearish crossover and the index continues to trade below its daily rising trendline support. This indicates that a broad-based leadership role for the entire financials pack may not have emerged yet.

Instead, the stronger opportunities may lie within the financial services universe outside traditional banks, as reflected in the Nifty Financial Services Ex-Bank Index. Stocks such as BSE, Angel One, MCX, PFC, Bajaj Finance and Shriram Finance are showing constructive base-building patterns near key support zones and could attract fresh buying interest if market conditions remain supportive.

Overall, the relative strength in financials appears to reflect genuine accumulation rather than mere short covering. However, the next phase of market leadership is likely to come from select private banks and non-bank financials rather than the banking sector as a whole. In this environment, stock selection may prove more rewarding than taking a broad sector exposure.

Nifty Auto was the worst-performing sector after weak August sales, while IT also faced selling pressure. Do the charts suggest further downside in auto and IT, or are these sectors approaching attractive tactical support zones?
The charts suggest that both the Auto and IT sectors are approaching important inflection points, but neither is yet displaying the kind of technical strength that would justify calling an end to the recent correction. While some short-term stability could emerge around current levels, the evidence for a sustained reversal remains limited. Investors may therefore need to distinguish between a tactical bounce and a genuine improvement in trend.

For the Nifty Auto Index, the recent weakness appears to be a natural reaction following a prolonged rally. The correction has unfolded after the index tested the upper boundary of a rising wedge pattern that had been developing over several months. Such patterns often indicate that upside momentum is gradually losing steam, and the current pullback may be part of that process rather than a sign of broader deterioration.

Importantly, the index has now retraced close to the 61.8% Fibonacci retracement level near 27,700, a zone that is often watched closely by market participants during corrective phases. At the same time, momentum indicators have cooled considerably. The Relative Strength Index (RSI), which had remained elevated during much of the previous uptrend, has moved closer to oversold territory. Historically, such conditions can create the backdrop for a relief rally as short-term selling pressure begins to exhaust itself.

However, while the possibility of a near-term bounce is increasing, it would be premature to interpret any rebound as the start of a fresh uptrend. The broader structure remains somewhat fragile and requires confirmation. The support band between 27,700 and 27,650 has become a critical zone for the index. Holding above this region would help stabilise sentiment and could trigger a recovery attempt. Conversely, a decisive breakdown below this support area would likely attract further selling pressure and expose the index to a deeper move towards the 25,700 region. That level assumes greater significance because it coincides with the lower boundary of the longer-term wedge formation and represents an important medium-term support area where stronger buying interest may emerge.

The picture for the Nifty IT Index is comparatively less encouraging. Unlike Auto, which is nearing a potentially important support zone, IT continues to exhibit signs of technical weakness. The index broke below its rising trendline support during the second half of August, signalling a deterioration in trend structure. Since then, prices have moved into a consolidation phase, but the nature of that consolidation has not been particularly reassuring.

Typically, healthy consolidations are accompanied by attempts to reclaim lost resistance levels. In this case, however, the index has repeatedly struggled to regain the crucial 31,900-32,000 zone. This inability to reclaim resistance suggests that buying conviction remains relatively weak and that market participants are still using rallies as opportunities to reduce exposure rather than build fresh positions.

The next major technical reference point lies in the 30,150-29,900 support band. As long as that zone remains intact, the index may continue to move sideways while attempting to build a base. However, a breakdown below this area could trigger a fresh leg lower and intensify downside momentum. Such a move would reinforce the view that the correction is not yet complete.

Adding to the cautious outlook is the behaviour of the sector's heavyweight constituents. Stocks such as TCS, Infosys, HCL Technologies and Tech Mahindra continue to display relatively weak price structures. Many of them remain below key moving averages or are struggling to sustain recovery attempts, suggesting that sector leadership is currently lacking. Until these large-cap names begin to exhibit stronger relative strength, it may be difficult for the broader IT index to mount a convincing recovery.

Read more: Motilal Oswal AMC CEO Prateek Agrawal explains why he is avoiding large banks, IT and FMCG stocks

From a comparative standpoint, the Auto and IT sectors appear to be at different stages of the correction cycle. Auto is approaching a zone where technical conditions are becoming oversold and where a tactical rebound could emerge. IT, on the other hand, remains stuck in a weaker structure and has yet to show the signs of accumulation that would typically precede a meaningful turnaround.

Overall, Auto appears closer to a support-driven opportunity for a short-term relief bounce, while IT continues to look technically vulnerable. For the near-term outlook to improve meaningfully, the IT index would need to reclaim and hold above the 31,900-32,000 resistance zone. Until that happens, rallies are likely to be viewed with caution, and the broader risk remains tilted to the downside rather than signalling the beginning of a sustained trend reversal.

RR Kabel, KEI Industries were among the top losers last week amid UltraTech's entry into the cables and wires business. Do you think these two stocks can fall further?
If the recovery attempt made by both stocks is an indicator, then the significantly higher volumes on the recovery spurt for RR Kabel suggest that it is better poised to arrest, if not reverse the downtrend. That said, KEI will not be far behind despite a muted recovery towards close, as deep downsided gapped opening, the approach of June’s support, limits the prospects of yet another crack right away.

Give us your top ideas of the week.
CARBORUNIV (LTP: 1130)
View: Buy
Target: 1190
SL: 1090

Carborundum Universal is showing encouraging technical strength after rebounding from the lower boundary of a narrowing wedge pattern, indicating demand emergence at key support levels. The stock is attempting to resume its broader uptrend, with price stabilizing near the wedge pattern support and gradually moving higher. Momentum indicators are also improving, as the MACD histogram is exhibiting signs of bearish exhaustion, suggesting that the recent corrective phase may be losing steam.

Further supporting the bullish case, the RSI has moved above the 50 mark and crossed above its moving average, reflecting strengthening momentum and a positive shift in trend bias. The recent volume breakout adds conviction to the setup, highlighting increased market participation and renewed buying interest.

The confluence of wedge support, improving momentum indicators, and strong volume activity points to a favorable risk-reward setup for an upside move towards 1190 in the near term as long as the stock sustains above 1090.