Nifty managed to recover most of Manic Monday's losses in the following three sessions and formed a bullish candle on daily chart, closing was higher than the opening level despite intraday volatility.
Nifty opened higher at 8451 and remained in a positive terrain throughout session amid volatility. The index touched an intraday high of 8749 and low of 8304, before end the session 323 points, higher at 8641.
Near term technical picture appears to be tilting in favour of the bulls and hence in the next trading session if the Nifty manages to sustain above 8749 level, then it can head to test its 15day EMA (8978), which has a good track record of offering support in upward phases and hence by the principle of polarity this level can become next resistance for the index.
But a close below 8304 can kick in some profit booking, as the Nifty has been almost up by around 15 percent in the last three sessions from the lows of 7511. In such a scenario, a dip between 8000 and 7800 would be a good opportunity to create fresh longs.
Through today’s announcements the Government has made provisions to ensure that families belonging to poor and lower to middle income are able to carry out their daily lives smoothly. However, we await relief measures for corporate India as well as small entrepreneurs, start ups, etc.
Short term trend of Nifty continues to be positive. Having moved up sharply in the last few sessions, there is a possibility of minor downward correction from the resistance of around 8883/9127. The anticipated downward correction could halt around 8200/8100 level over the next few sessions.
Nifty is not expected to decline decisively below 7500 level in the short term. Confirmation of bottom reversal as per daily/weekly timeframe chart could open upside target for the market.
Positional traders who are sitting on long positions should consider booking profits around 8900, whereas fresh buying should be initiated only on correction.
All the sectoral indices ended in the green. Midcap and Smallcap indices rose over 3 percent each.
- Someshwar, Technical analyst, Equidius Research