NEW DELHI: Dalal Street traders turned extremely bearish on Nifty50 formed a long bearish candle for the day after the Maharashtra government imposed serious curbs in the state to stem the spread of Covid infection.
Nifty50 tumbled 229 points, or 1.54 per cent, to 14,637 level. At one point of the day, the index had lost over 400 pints, but recovered some ground as some buying emerged at lower levels. Analysts said that buying may prove non-consequential.
“Albeit Nifty50 recovered around 180 points from its intraday low of 14,459, it seems to have resumed its downswing, as the negative advance-decline ratio was decisively skewed in favour of the bears,” said Mazhar Mohammad, Chief Strategist for Technical Research & Trading Advisory at Chartviewindia.in.
He said as the trend appears to have tilted in favour of the bears, the possibility of Nifty testing the recent corrective swing low of 14,264 level remains higher.
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ETMarkets.com“For the time being, traders are advised to avoid longside bets, while aggressive traders with a high risk appetite should consider any bounce into the 14,700-750 zone as an opportunity to create fresh positional shorts with a stop loss above 14,850 level on closing basis and look for an initial target of 14,450,” Mohammad said.
With wild swings, market volatility has also risen sharply. India VIX, the index that tracks nervousness and fear in the market, rose 6.14 per cent to 21.21.
For the last 20 days, the 14,450 level has been an important point on the daily chart. “Even today, breaking all the important supports, the market has gone back to 14,450 level and come back. This level is likely to continue acting as a trend decider,” said analysts.
“The 14,670 and 14,730 levels will be key obstacles now and it is advisable to reduce weak long positions around these levels. Trending above the 14,900 level can be subverted. On some days, you need to stay stock specific,” said Shrikant Chouhan, EVP – Equity Technical Research, Kotak Securities.
ETMarkets.comAll sectoral indices, except Nifty IT and Nifty Metal, shed weight during the session. Market breadth was weak with an advance-decline ratio of 1: 2. The pandemic-sensitive sectors like banks, auto and real estate were beaten down heavily.
“The overall structure still looks like one of narrow consolidation, as the index slipped from 14,900 level for a third time on the hourly charts, and we saw good profit booking from the same levels. Now if index manages to sustain below 14,700 level, then we may see the next move towards its previous swing low of 14,300. If it manages to hold above 14,700 level, then some relief rally can be seen,” said Rohit Singre, Senior Technical Analyst at LKP Securities.
Mohammad said one should not expect strength in the index unless Nifty registers a close above 14,850 level. “Till then, the market’s trajectory shall be on a slippery slope with an initial target of 14,459,” he said.
