Nifty closed half a percent lower and formed a bearish candle on the daily chart as closing was lower than opening value. It continued selling pressure for the 3rd consecutive session and almost tested its 50day Exponential moving average (12076) at an intraday low of 12087.
After showing a weakness within a small range in the last session, Nifty failed to sustain the opening intraday gains today, as slipped into a reasonable weakness and closed the day lower. A long negative candle was formed today, that has entered the crucial gap area of 12044 &12132 levels of 9th Jan 2020. Today's pattern indicates a downtrend continuation pattern.
Longer-term uptrend status like higher tops and bottoms is still intact. Nifty sustaining above the support of 12044 levels could be a part of a higher bottom formation.
We continue to remain cautious on the markets given that the indices are trading at stretched valuation and earnings season has begun on a muted note. Expectations from the budget are high this time around given the current economic slowdown. This is likely to drive momentum across sectors.
We strongly believe the index is in a structural uptrend and the current correction is a buying opportunity. Volatility is expected to remain high on account of the upcoming event - Budget 2020. Traders are advised to maintain a stop loss of 11832 on Nifty and accumulate on longs. Investors can consider increasing positions in high-quality frontline and midcap stocks.
Sector Wise:- Except IT, all other indices ended in the red. BSE Midcap and Smallcap indices also ended lower.