Nifty closed below 9600 and formed a large bearish candle on daily chart as closing was far lower than opening level.
Nifty fell more than 400 points to open at 10039, which was also an intraday high, and gradually extended losses as the day progressed to hit a day's low of 9508. Nifty plunged 868 points or 8 percent to 9590, lowest level since 30th June 2017.
Bears were on the rampage yet again as Nifty was forced to open the day with a huge gap down which created largest ever fall of 8 percent in the recent history of Nifty. Though no level appears to be sacrosanct around these levels 9500 seems to be the major, based on our long term trend studies with us, which should at least hold by the end of this month. I feels in case if Nifty slips below 9508 in the near term then next support can be expected around 9075. Investors should refrain from catching the falling knife.
Long term investors with a high risk appetite can start nibbling into quality stocks with the knowledge that there can be more downsides and they have the ability to withstand the pain of further fall if any in those counters.
Nifty index has been making lower top lower bottom from last four weeks and saw a correction of around 1900 points in just five trading sessions.
As markets are completely under the grip of fear, traders should not look for any type of trading opportunity unless Nifty stabilises at particular levels for a couple of sessions.
In the scenario, where global bourses are witnessing intraday swings of 5/10 percent, Traders are advised to avoid bottom fishing as the massacre may continue in coming days too.
All the sectoral indices ended in the red, with PSU Bank index slipped over 12 percent followed by Energy (down 9.4 percent), metal, IT and Pharma down over 8 percent each.
- Someshwar, Technical analyst, Equidius Research