The next Nifty 50 chart support is nearly 2,000 points away, warns CLSA chartist Balanco

Laurence Balanco, the CLSA chartist, has warned that the next Nifty support could be nearly 2,000 points away, leaving the market vulnerable to further weakness.The Nifty 50 index has entered a “technical correction”, meaning a 10% drop from its record high levels of 26,374 that it had surged to on January 5 this year.

In an note on Friday, March 13, Balanco wrote that continued weakness below the 24,300 – 24,500 area has now seen the index break below the record high levels and also slide below the 23,700 – 23,800 zones, which was the “upper boundary” of the double bottom pattern formed during March and April last year.
“This leaves the market vulnerable to further weakness with the next chart support only seen at 21,777 – 21,800 levels,” Balanco wrote. These levels are at least 1,800 points below than the Nifty’s close on Thursday.On the flip side, the 24,300 – 24,500 zone, which earlier acted as a support, will now become a resistance zone, the CLSA chartist said.

From January 5, when the Nifty had surged to record highs, 37 stocks on the index have delivered negative returns, with more than 20 stocks down 10% or more during this period.

The Nifty 50 index ended another 225 points lower on Thursday at 23,639, and is now down nearly 3,000 points from its record high in January.