Analyst Somesh view - Closing Comments April 01

2021-04-01 18:34:44 By Marepally Krishna

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Nifty formed a bullish candle, which resembled the Hanging Man pattern on the daily charts, while on the weekly Chart, there was a small bullish candle formation. Nifty gained 2.5 percent during the truncated week.

 

A Hanging Man is a bearish reversal candlestick pattern that is usually formed at the end of an uptrend or at the top. In a perfect 'Hanging Man' pattern, there is a small upper shadow or no upper shadow at all, a small body and a long lower shadow.

 

Nifty rebounded sharply at the opening at 14798 and erased some gains in the morning itself to hit the day's low of 14692 but did not break the previous day's closing.

 

Nifty rebounded immediately and gradually extended gains to touch an intraday high of 14883. Overall it remained in the positive terrain for the entire session and closed at 14867, up 176 points, or 1 percent.

 

Nifty bounced back sharply from the previous day's selloff and closed with a percent gains on US President Joe Biden's $2.3-trillion spending plan, strong buying in metal stocks and a recovery in the banking sector.

 

Markets started the new financial year on a robust note led by optimism in the global markets. Announcement by US President Joe Biden to invest USD 2.3 trillion in infrastructure boosted sentiments. Initially the benchmark opened gap up but gains fizzled out gradually as the day progressed. However, in the second half healthy buying amongst the sectors such as metals, banks, auto supported markets to steadily inch higher. Consequently, the Nifty ended near day’s high at 14,867 levels, with gains of 1.2%. The broader markets outperformed and ended higher in range of 1.6-2%. Barring FMCG, all the sectoral indices closed in positive.

 

Markets are likely to take cues from global peers as stimulus package announcement in the US last night led to renewed buying interest in the global markets. In the near term, positive bias is expected to continue however, rising COVID cases in India would remain a key concern. As Q4 earning season is approaching, investors focus will shift to earnings announcements and management commentary.

 

Nifty made a strong recovery from the intraday low of 14692 and formed a Hanging Man pattern and a small bullish candle on weekly charts. As the trend seems to be sideways, this indecisive formation may not have the same pattern implication as it can be seen in a trending move.

 

In sideways phases, price action often criss-crosses the moving average, reducing its reliability and hence, a close above the 20day average itself shall not be significant.

 

At this juncture, 14900 looks to be significant resistance in the near term. If the index closes above it, then it can induce some strength in the index which can expand the upswing into 15100/15170 zone.

 

Traders should initiate long positions only if the Nifty sustains above 14900 for at least 30 minutes and look for a modest target placed around 15120.

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