Nifty closed way below 11700 and formed a bearish candle on daily charts as closing was below its opening level.
Nifty corrected for the fourth consecutive session, falling below the 200day moving average, placed at 11717 following a decline in global peers, as investors remained worried about the economy over coronavirus spread. There could be a pull back rally as the index has fallen more than 3 percent this week, but if it breaks 11614, the next support level, then there could be a further correction.
Nifty opened sharply lower at 11738 but attempted recovery in the afternoon to hit the day's high of 11783. However, it failed to sustain the recovery and slipped again to hit the day's low of 11639 in the late trade, especially after a correction in Dow Jones futures indicated a weak opening for US markets.
Though at this point in time, buy signals are missing on lower time frame charts, Nifty appears to have stretched on the downside by abnormally trading away from its short term moving averages (5day SMA at 11903), which should ideally pave the way for a pull back rally sooner than later. In the next trading session, if the Nifty opens in negative terrain, then it can make an intraday bottom somewhere in the zone of 11640/11600 level.
Traders with a high risk appetite to create long positions if the Nifty opens in a negative zone and trades between 11640 and 11615, with a stop below 11600 on a closing basis.
Sector wise :- Auto index fell over 2 percent followed by energy, infra, IT, metal and pharma. Midcap index fell 1.3 percent, while Smallcap index was down 0.8 percent.