Trade Setup for August 29: Nifty Breaking Crucial Levels Signals Further Downside, Key Support Zones to Watch
August 28, 2025 – By Meghna Sen
The Indian equity market witnessed continued weakness on Thursday, August 28, as the Nifty 50 index faltered and closed deep in the red amid heightened volatility. The market’s bearish momentum persisted despite supportive global cues, largely due to escalating concerns over fresh US-imposed tariffs and their potential impact on India’s export sectors.
Nifty’s Recent Performance: Sharp Declines Heighten Risk
Over the past five trading sessions, the Nifty has declined sharply by 672 points from its recent peak of 25,153. On Thursday, the index fell 211 points, or 0.85%, settling at 24,501. This drop marked a significant retracement that has put the index under pressure and exposed vulnerabilities to further losses.
The bearish trend was echoed by weakness in the broader market, with the Nifty Midcap and Smallcap indices falling 1.3% and 1.5%, respectively, continuing their underperformance relative to benchmark indices.
Sector-wise Impact
Among sectors, IT and Realty bore the brunt with losses exceeding 1.5%, reflecting investor caution. In contrast, Consumer Durables emerged as a solitary gainer during the session.
The overall subdued market sentiment was driven by heavy selling pressure in large-cap heavyweight stocks, which overshadowed pockets of resilience across some sectors.
Tariff Concerns Drag on Market Sentiment
Investor unease intensified following the US government’s announcement of imposing 50% tariffs effective August 27 on several Indian exports. Key affected sectors include textiles and apparel, gems and jewellery, marine products such as shrimp, leather, and footwear—all highly dependent on the American market for a substantial portion of their revenues.
Market participants are now closely monitoring how these tariffs will weigh on India’s export earnings, which could dampen growth prospects for export-oriented companies and the broader economy.
Global Context
Globally, investors remain cautious ahead of important US economic data releases, including Q2 GDP figures and weekly jobless claims. These data points are expected to influence investor sentiment worldwide and could set the direction for markets in the near term.
Technical Outlook: Nifty’s Critical Support and Resistance Levels
Market analysts highlight that the technical setup for the Nifty has turned fragile, signaling a bearish trend in the short term.
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Nagaraj Shetti, HDFC Securities, notes that the underlying trend remains negative, with further downside risks looming. He identifies crucial support levels between 24,300 and 24,250, corresponding to previous swing lows and the 200-day Exponential Moving Average (EMA). On the upside, any recovery is likely to encounter resistance near 24,700. – Rupak De from LKP Securities points out that the market dynamics have shifted recently from a “buy on dips” approach to a “sell on rise” strategy. He advises cautious positioning and staying light on holdings. According to him, the Nifty faces resistance at 24,650 and 24,850, while support is seen at 24,480 and 24,300. – Nilesh Jain of Centrum Broking says the Nifty broke below its 100-day Moving Average at 24,670, indicating ongoing structural weakness. He predicts a possible retest of the August low near 24,350 in the near term. If this support fails, the next key level sits at the 200-day Moving Average around 24,070. Conversely, a firm move above 24,700 may spark a short-covering rally towards the 25,000 mark.
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Nandish Shah, also from HDFC Securities, points out that after Thursday’s session, the Nifty has slipped below its 20-, 50-, and 100-Day EMAs, confirming a weak positional trend. Immediate supports at 24,337 and 24,266 are crucial—these coincide with previous swing lows and the 200-Day EMA. Resistance is expected near 24,700. ### Strategic Takeaway for Traders and Investors
The technical outlook and ongoing macroeconomic headwinds suggest that the Nifty is vulnerable to further downside in the short term. Traders should watch the key support zone between 24,300 and 24,250 closely. Breaching this level could open the door for accelerated declines.
On the other hand, any recovery effort will likely face stiff resistance near 24,700. Market participants are advised to exercise caution, manage risk prudently, and consider the evolving global and domestic economic data that could influence market direction.
Disclaimer: The views and strategies expressed are those of market experts and do not constitute investment advice. Investors are encouraged to consult certified financial professionals before making decisions.
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