Nifty Outlook for September 3: 23,800 support stands but sell on rise template continues

The Nifty opened nearly 200 points lower on Wednesday but remained largely range-bound through the session, eventually closing at 23,914, down 0.59%.

Market sentiment remained weak amid rising bond yields in the US and Japan, higher crude oil prices, escalating tensions between the US and Iran and weak foreign institutional investor (FII) flows.

Brent crude surged above $95 a barrel following the escalation in the West Asian conflict. Meanwhile, global bond yields have climbed to multi-year highs amid concerns over a near-term US rate hike, while the dollar index has moved closer to the 100-mark, adding to pressure on global equities.

Against this backdrop, analysts expect the Nifty to remain under pressure in the near term, with a sell-on-rise strategy likely to remain in focus.

Nagaraj Shetti of HDFC Securities said the overall trend of the Nifty remains weak. The formation of lower tops and bottoms points to a sell-on-rise opportunity on any pullback from current levels, he said.

According to Shetti, any bounce could face strong overhead resistance in the 24,100-24,200 zone. On the downside, a break below 23,800 could drag the index towards the next important support at 23,600 in the near term.

Sudeep Shah of SBI Securities said the immediate support for the Nifty is placed in the 23,780-23,750 zone. Any sustainable move below this band could extend the weakness towards 23,600, followed by 23,450 in the short term.

On the upside, immediate resistance is placed in the 24,030-24,050 zone, Shah said.

Rupak De of LKP Securities said the index recovered from the day's lows after a gap-down opening, but the underlying weakness remained despite the intraday recovery.

De expects the bearish sentiment to persist in the short term, with a sell-on-rise strategy likely to remain preferable as long as the Nifty stays below 24,000. On the downside, the correction could extend towards 23,700-23,730, he said.

Hitesh Rathi of Angel One said the 23,800-23,750 band remains an immediate and crucial support zone. A decisive daily close below this band could open the door for a further decline towards the 23,500-23,450 zone in the short term.

On the upside, the 24,000-24,050 band, which had acted as an important support zone until recently, is now likely to turn into immediate resistance. The next major hurdle is seen in the 24,150-24,200 band, Rathi said.

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