The Nifty 50 index is facing significant downward pressure, with technical patterns pointing to a deeper correction in the 21,000–22,000 range. From a structural perspective, Nifty appears to be progressing in Wave (C) of a larger corrective sequence, with the current action likely in Wave 3 of (C). Here’s a breakdown of this anticipated move and some complementary fundamental insights.

The Wave Count and Price Action

The chart highlights a clear corrective Elliott Wave structure. The sequence is unfolding as follows:

1. Wave (A):
   • The initial impulsive move to the downside, completed in five waves, marked the start of the correction.
   • This phase also created the lower boundary of the descending channel seen on the chart.
2. Wave (B):
   • The retracement rally in Wave (B) failed to break the descending trendline. This reversal was weak and corrective, suggesting sellers remain in control.
3. Wave (C):
   • Nifty is now accelerating downward in Wave (C), with the index showing characteristics of being in Wave 3, the most forceful leg within Wave (C).
   • The internal structure of Wave 3 on the chart suggests a steady grind lower, with significant downside potential.

Bullish Flag and Critical Levels

The Bullish Flag visible on the chart is a key technical feature guiding the price action:

1. Lower Boundary Target:
   • Projecting the lower boundary of the channel points to the 21,000–22,000 range, aligning with the likely completion of Wave (C).
2. Interim Levels:
   • The 23,300 level, which coincides with previous swing lows, is an area to watch for temporary support.
   • However, the momentum within Wave 3 suggests this level may not hold for long.

A Weakening Macro Environment

The technical decline is complemented by fundamental factors adding pressure to Indian equity markets:

1. Global Sentiment:
   • A resurgence in risk aversion globally, driven by fears of slowing economic growth and potential rate hikes by the U.S. Federal Reserve, has weighed on emerging markets, including India.
   • This bearish sentiment has amplified outflows from Indian equities.
2. Domestic Concerns:
   • Weak corporate earnings in certain sectors, along with concerns about valuations, have eroded investor confidence.
   • Additionally, rising crude oil prices and inflationary pressures remain headwinds, tightening liquidity in the system.

These factors, in tandem with technical selling pressure, are driving Nifty’s bearish momentum.

What to Expect Next

Given the alignment of technical and fundamental factors, the likelihood of Nifty continuing its decline is high.

• Wave (C) Completion Zone:
  • The 21,000–22,000 region remains the primary target for Wave (C), representing the 100% projection of Wave (A) from the Wave (B) peak.
• Acceleration in Wave 3:
  • The ongoing Wave 3 of (C) is set to intensify, with minimal retracements, as sellers dominate.
  • The completion of Wave 3 will likely lead to a brief Wave 4 consolidation before Wave 5 completes the overall corrective structure.

Conclusion

Nifty’s trajectory is firmly bearish, with Wave (C) driving the index toward the 21,000–22,000 range. The confluence of a strong technical structure and weakening macroeconomic conditions supports this outlook.

While interim levels like 23,000 may provide momentary relief, the broader trend remains downward. Traders and investors should approach with caution, staying aligned with the bearish momentum until Wave (C) reaches its logical conclusion.