Nifty Trade Setup for September 10: RSI Signals Oversold Conditions, Key Levels in Focus

The Nifty 50 index witnessed another weak session on Wednesday as selling pressure continued to dominate the market. The index opened with a gap down below the July 2026 swing low and initially attempted a recovery during the afternoon session. However, the recovery failed to sustain at higher levels, and the index resumed its decline to close at the day’s low.

The Nifty ended the session lower by 203.60 points at 23,431.50, marking its sharpest single-day decline in more than two months. With this fall, the index closed at its lowest level since June 11.

Market Breadth Remains Weak

In the Nifty 50 universe, 36 stocks ended the session in the red, while 13 stocks closed higher and one stock remained unchanged.
The overall market breadth on the NSE was also weak, with 2,092 stocks declining compared with 1,481 stocks advancing, indicating broad-based selling pressure.

Nifty IT Index Falls Sharply, While Nifty Metal Index Gains Over 1.5% 

Most major sectoral indices ended lower, with Nifty IT emerging as the biggest drag on the market. The Nifty IT index declined 3.24%, followed by Nifty Realty, which fell 2.23%.

However, some sectors managed to buck the trend. Nifty Metal gained 1.79%, while Nifty Energy also ended in positive territory. 

Nifty Technical Setup Indicates Weak Trend

The Nifty formed a sizeable bearish candle on the daily chart, characterised by a lower high and lower low formation along with a downside gap. This was the third consecutive session of decline, and the index has now breached the crucial support zone near 23,600.

From the August 26 high, the Nifty has declined 947.10 points, or 3.88%. The index is currently trading 3.11% below its 50-DMA, reflecting continued weakness in the short-term trend.

The index also closed outside the lower Bollinger Band. Considering the index has moved far away from the 50-DMA and 8-EMA, indicating that prices have moved significantly away from their mean. This raises the possibility of a short-term mean reversion attempt in the next few sessions. However, the broader trend remains weak as the index is trading well below all its key moving averages. 
Momentum indicators continue to reflect weakness. The RSI stands at 26.44, indicating oversold conditions, although such conditions can persist during strong downtrends. Meanwhile, the MACD histogram shows further expansion in bearish momentum, suggesting that sellers continue to maintain control.

Key Levels to Track for Nifty 

Given the sharp decline and the close below the lower Bollinger Band, a short-term pullback cannot be ruled out. However, a meaningful reversal will require the Nifty to reclaim the downside gap zone created on September 9, placed between 23,572 and 23,623.

A sustained close above this zone would provide the first sign of recovery, with the 8-EMA at 23,788 acting as the next immediate resistance.

On the downside, immediate support levels are placed at 23,311 and 23,172.

For any recovery attempt to gain credibility, the index needs to sustain above key resistance levels for at least 2–3 trading sessions. At present, the overall trend structure remains weak, with the index continuing to form a sequence of lower highs and lower lows. Until this structure changes, traders should remain cautious and avoid aggressive long positions.