Nifty broke the all important 7900 mark in early trade but recovered sharply before signing off with a positive tick on intraday charts to form a bullish candle on the daily Chart, but took a hit of 2.4 percent compared to previous session's close.
Nifty opened sharply lower at 8063 and within few minutes hit the day's low of 7832. It remained volatile for the remaining day. Nifty bounced back after breaching 7900 in intraday trade. This can be an indication that the index is heading for a consolidation provided it sustains above 7832 for at least next couple of days.
Nifty formed a long legged doji candle pattern which suggest uncertainty in the markets. Now index has crucial resistance near 8550 zone and once we may see close above said level then we may see a good relief rally in the index till then it will be sell on rise markets.
The sharp recovery from the day's low indicates that the market may see some consolidation at current levels, but global cues could continue to drive sentiment,
This kind of recovery after testing strong supports present on long term charts around 7900 can be an indication that the Nifty is heading for a consolidation, provided it sustains above 7832 for at least the next couple of days.
With Worries about a case of community spread of the virus, investors fear further impact from Covid-19 and preferred cash instead of investments. All asset classes are seeing downward pressure. FIIs have also been net sellers to the tune of Rs 40000 crore this month, further putting pressure on the markets. However, pockets of value buying in quality stocks were seen during the session.
If the index breaches 7832, then the slide can continue towards 7548. However, sustaining above 7832 level, the ideal range for consolidation would be 7900/8500.
Considering the volatile phase, a sharp correction in blue chip counters shall be considered as an opportunity for long-term investment.
A sharp correction in blue chip counters should be considered as an opportunity for long term investment.
All the sectoral indices ended in the red, while Midcap and Smallcap indices fell 3.7 percent and 4.5 percent respectively.
- Someshwar, Technical analyst, Equidius Research