Nifty recovered 1400 points from the day's low and formed a large bullish candle on daily chart, as the closing was much higher than the opening level. However, for the week, it lost 9.4 percent to form a bearish candle on the weekly scale.
After hitting lower circuit for the first time since 2008's global financial crisis, the trading was stopped for 45 minutes, Nifty reopened with losses of around 5 percent and gradually started recovery in late morning deals. It crossed the 10000 mark in the afternoon and hit the day's high of 10159 before closing 365 points.
But after re opening, market witnessed as sharp recovery. The moves were strengthened in afternoon, especially after strong rally seen in European peers and even the Dow Jones futures recovered more than 1000 points from lows.
Nifty recovered on the back of strong buying from domestic institutional investors (DIIs), bargain hunting by long term portfolio investor, some hope of recovery in global bourses and short covering in many beaten down oversold stocks.
Considering the global volatility, it will be too early to conclude that these gains will sustain going forward, as similar rallies failed to kick in sustainable moves in Dow Jones recently. Hence, in the best case, the market should remain rangebound between 9500/10150 level.
Some strength can be expected if the Nifty closes above 10160, with an initial target of 10300. A close below 9500 can induce some weakness, with a downside target of 9100.
For the time, long term investors can adopt SIP kind of strategy in their favourite largecap stocks that have recently outperformed with new highs.
Sector Wise : Bank gained the most with more than 6 percent rally as PSU Bank index jumped 10 percent and Private Bank index climbed over 5 percent intraday. Nifty Bank itself gained more than 4300 points from day's low.
- Someshwar, Technical analyst, Equidius Research