Nifty Trade Setup for September 4: Nifty Forms Bearish Marubozu

The Nifty started Thursday’s session on a positive note, opening with a gap-up and reclaiming the crucial psychological level of 24,000 soon after the opening bell. The index moved higher to an intraday high of 24,025.40, which was close to its 100-DMA and the 61.8% Fibonacci retracement level of the recent upswing from the July 24 low to the August 3 high.

However, the optimism at higher levels was short-lived as profit booking emerged. The index gradually surrendered its early gains and slipped below the 23,900 mark. It closed at 23,873.45, near the day’s low, marking its lowest closing level since July 24.

Index Breadth Remained Weak, Broader Market Outperformed

The index breadth remained weak, with 29 of the 50 Nifty stocks ending the session in negative territory, while 21 stocks closed higher.

However, the broader market witnessed relatively better participation, with 2,208 stocks advancing compared with 1,313 declining stocks. The outperformance of mid and small-cap stocks provided some support, with the Nifty Small-cap 100 gaining 1.20% and the Nifty Midcap 100 index rising 0.37%.

Nifty Realty Surged Over 2%; IT Under Pressure

Among sectoral indices, Nifty Realty was the top performer, advancing 2.58% during the session. On the other hand, Nifty IT remained under pressure and ended as the biggest sectoral loser, declining 0.85%.

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Nifty Forms a Bearish Closing Marubozu Pattern

The day’s price action resulted in the formation of a sizeable bearish candle. The index closed down by more than 150 points from its intraday high and settled at the day’s low, resulting in a close=low formation. This resembles a bearish closing marubozu pattern.

The Nifty continues to trade below its short-, medium-, and long-term moving averages, keeping the overall technical structure under pressure. The recent breakdown from a trading range of nearly 424 points also remains a concern. If the index fails to hold the September 2 low of 23,787, it could move towards the measured target of the range breakdown, which is placed in the 23,600–23,528 zone, near the July low.

Key Levels to Watch for Nifty

On the downside, 23,787 remains the immediate support level. A decisive break below this level could open the door for further correction towards 23,600–23,528.

On the upside, the Nifty 50 needs to reclaim and sustain above the 24,025–24,028 zone, which represents Thursday’s high and the 100-DMA. A sustained move above this level could trigger short covering and push the index towards the 50-DMA, currently placed near 24,207.

Outlook of Nifty For September 4: Caution Prevails Below Key Resistance

The near-term structure remains cautious, and aggressive bullish positions may remain risky until the index shows strength above key resistance levels. A close above the previous day’s high or a sustained move above the 100-DMA could improve sentiment and support a recovery.

For now, the 24,207–24,239 zone will act as a major resistance area, with the 20-DMA and 50-DMA placed within this range. On the lower side, Wednesday’s low of 23,787 remains the critical support level, as it marks a parallel low and a key point for the index to defend.