Nifty benchmark recovered 300 points from the day's low, hit in the morning trade, to close a shade above 7800 and formed a small bearish candle that resembled a Doji pattern on daily chart.
A Doji candle indicates indecisiveness among the bulls and the bears, as the index closed near the opening levels and bounces were being sold in the absence of a follow up buying.
Nifty opened sharply higher at 7848 but fell to the day's low of 7511 in the initial hour itself. It then showed immediate recovery and hit the intraday high of 8036 in the last hour of trade as the Finance Minister announced relief measures.
To give relief to the people and businesses as coronavirus disrupts life and economy, Finance Minister Nirmala Sitharaman announced a raft of changes on the regulatory front and extended deadlines for many compliances, cheering the market.
Market came off its highs after no significant announcements by the FM and the fact that the economic package was still in development. European and US manufacturing activity data due later, which may indicate the impact of Covid-19 on economies, could influence markets tomorrow.
In the next trading session if the Nifty manages to defend 7511 level on an intraday basis then eventually it can pave the way for further short covering on expiry day.
If 7511 is breached then the downswing shall initially get extended towards 7350 levels and below that 6825 can’t be ruled out.
Any Pull back attempt bulls shall face their initial challenge in the zone of 8159/8575 level and strength can be expected on a close above 8575 level.
Traders are advised to wait for one more positive close in next session before deciding on long side trading positions.
Except realty all other sectoral indices ended in the green. Midcap up 1.5 percent, while Smallcap index ended flat.
- Someshwar, Technical analyst, Equidius Research