Nifty Auto Slips from Peak: Healthy Correction or Deeper Reversal? Trend Breakdown - 05.04.2025
Nifty Auto Slips from Peak: Healthy Correction or Deeper Reversal? Trend Breakdown – 05 April 2025
K Karthik Raja (Market Educator & Technical Analyst)
MCA | MBA | M.Com | MSc Psychology | PGJMC | CST | MDAT | CFA Pursuant
Key Factors Affecting & Reasons:
- Rising input costs (commodities, logistics) are pressuring margins for auto manufacturers
- Demand remains steady, but high base and inventory overhang are causing some slowdown in growth momentum
- EV adoption is creating a mixed bag – strong for some players, transitional drag for others
- Global cues remain cautious, especially due to export market dependency for select auto majors
- FII outflows in the last few weeks have also added pressure on the sector
Key Levels to Watch:
- Immediate resistance: 23,900 – 25,000
- Crucial support:
- 20,600 (currently testing)
- 17,950 (aligned with 200-week MA – strong historical support)
- Breach of 20,600 may lead to further downside
- Holding above 20,600 can trigger a relief bounce toward 22,500+
Volume Analysis:
- Volumes spiked during recent declines – signs of profit booking and panic exits
- Lately, volume has started tapering – indicating selling exhaustion
- Any significant uptick in volume near support can indicate reversal signals
Dow Theory Chart Analysis & Observations:
- The long-term trend is still up, but a short-term correction is underway
- Price is nearing long-term support zones and moving averages
- RSI at 39.12 – approaching oversold, with scope for a bounce
- MACD remains negative, showing loss of momentum
- ADX at 24.23 suggests a weak but present trend – not strongly directional yet
Stocks to Watch:
Tata Motors
Maruti Suzuki
Bajaj Auto
Hero MotoCorp
TVS Motor
M&M
Market Insights
Short-term view:
- Expect a possible consolidation phase between 20,000 and 22,500
- A clean break below 20,600 could invite short-term weakness toward 18,000
- Quick bounce likely if RSI dips below 35 and reverses
Long-term view:
- Structure remains bullish as long as the index holds above 17,950
- Investors with a long-term horizon may consider accumulating on dips
- Once the correction is over, targets of 26,000+ remain intact over 9–12 months
Disclaimer:
This content is for educational and informational purposes only. It should not be considered financial advice. Please consult a certified financial advisor before making any investment decisions.
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