Nifty witnessed the second biggest single day closing loss in the last one week and formed a bearish candle, which resembles a Harami pattern on daily chart.Nifty opened lower at 9587 and hit the day's low of 9165, following the rout in global markets.
A Bearish Harami pattern is formed when there is a large bullish green candle on day one followed by a smaller bearish candle on day two. The most important aspect of the Bearish Harami is that prices gap down on day two and are unable to move higher back to the close of day one.
Market participants appear to be clueless about the rapidly spreading pandemic, which is resulting in the widespread selloff among global markets without any respite, which even forced Indian markets to give up almost all the gains witnessed in last Friday’s session.
Fears of the virus spreading in India coupled with choking of liquidity is adversely impacting consumer demand across sectors and FII pressed sales throughout the day sparing none. The street is keenly awaiting positive measures from the RBI today post-market to address the issues.
In the next couple of trading sessions, if the index trades below 9100 consistently, then sometime next week, it can revisit the panic lows of 8555.
In case the index manages a sustainable close above 9600, then sideways consolidation can be expected in 9100/10004 range. While near term trading opportunities may continue to remain uncertain but certainly a case for long term investment is strongly evolving around these level.
Considering the global scenario, traders should refrain taking long positions as all markets are in a strong bear grip and all the small bounces have been used as selling opportunity.
At the current juncture, there is no sign of reversal on chart, Traders are advised to remain cautious till market doesn't settle.
- Someshwar, Technical analyst, Equidius Research