Nifty continued the downward trend for the fifth consecutive session on the expiry day, echoing weak global sentiment arising out of fears of coronavirus turning into a pandemic, and formed a small bodied red candle that resembles a Hammer pattern on daily chart.
Nifty after trading sharply lower in the morning recovered more than half of the losses in the afternoon, the last day of the February series.
A Hammer is a bullish reversal pattern, which occurs at the bottom of a trend. This pattern appears after or during a downtrend. It is a single candlestick pattern.
We believe that the Indian markets would continue to track global developments with respect to Coronavirus and could exhibit volatility in the near term. The announcement of Q3FY20 GDP data on Friday will be a key domestic cue and will be actively watched by the market participants. In these uncertain times following stock specific approach would be more prudent.
If Nifty sustains above 11716, then we may see some pullback move towards 11883 and then 11965 level in coming days. However a failure move beyond 11716 and a hold below 11490 could result into extension in ongoing correction towards 11090 level.
Nifty moving down further, Traders will need to watch if the Nifty can now hold above the next major supports at 11579/11614; else the current downtrend is likely to continue. Any pullback rallies could find resistances at 11695/11779.
Sector wise :- Except pharma, all other indices ended in the red. PSU Bank index fell 2.5 percent, followed by the IT, energy, metal, infra and auto. Midcap index fell 0.6 percent, while Smallcap index shed nearly 1 percent.