Bearish Trend in Nifty and Global Markets - What's next?

Over the past few weeks, Nifty has slipped below a consolidation range that had held for more than 10 months on the weekly chart. What’s concerning is not just the breakdown, but the fact that the index hasn’t been able to bounce back meaningfully since.

Nifty Weekly chart showing a breakdown below a long range

The Indian markets are facing pressure from multiple fronts. Geopolitical flare-ups are disrupting supply chains, and the relentless fall in rupee is increasing inflation worries. The turmoil in the global markets is rubbing off. The combination of all these factors is taking its toll.

From a technical perspective, the next major support for Nifty comes in around the 21,700–21,750 zone, which is still more than 1,000 points away. If we do get there, it would mark a decline of over 18% from the peak — getting uncomfortably close to what we typically call a bear market.

It’s not just Nifty showing weakness — the broader market is also under pressure. Consider below on the weekly charts:

1️⃣ Bank Nifty has broken down from a broadening pattern

Banknifty Weekly chart showing a breakdown below a broadening pattern

2️⃣ Nifty IT has seen a major Head & Shoulders breakdown

IT Weekly chart showing a breakdown below a massive H&S

3️⃣ Midcaps have broken out of a Head & Shoulders pattern within a long consolidation

Midcap Weekly chart showing a breakdown below a H&S pattern within a long range

4️⃣ Smallcaps, already weak, broke down earlier from a descending triangle

Smallcap Weekly chart showing a breakdown below descending triangle and continued downside

Across all these indices, the next meaningful support levels are still quite far away. That suggests the current downtrend may not be over yet. The turmoil in the global markets, led by US, is acting as a catalyst to the fall.

The US markets have cracked under the weight of the ongoing war and its economic implications. The USD has gained ground and on the verge of a breakout from a triple top pattern.

Dollar Index Weekly chart indicating a breakout imminent from a triple top pattern

DJIA Futures has broken below a broadening pattern on the weekly chart the week prior to the last week. The candle for the last week has formed an Outside Strong red pattern where the upper wick goes above the real body of the prior candle before the candle closing in the red. This depicts that the price did attempt strong recovery during the week, however, could not sustain and declined to close in the red. A proof that bears are in control and a strong sell signal.

DJIA Weekly chart showing a breakdown below a broadening pattern

S&P and Nasdaq weekly charts show a similar pattern, however, the candle for the last week is much weaker.

S&P Weekly chart showing a breakdown below a broadening pattern that is also a rounding top

The breakdown in the major US indices and the Outside Strong Red candle last week implies that the downside is likely to continue, also given the fact that the immediate support levels are quite a distance away.

Let the markets and time tell what comes next.

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