INSUBCONTINENT EXCLUSIVE:
NSE Nifty slumped for a seventh straight session on Monday, as market sentiment took a hit after two new coronavirus cases were confirmed in
The domestic stock market made a positive start and the index moved past the 11,400 level in the early trade
However, the headline index reversed course in the second half and lost over 350 points in an hour
cent to the 25.20 level.
The market on Tuesday is expected to try and find a temporary bottom
Fresh Covid-19 cases in India might fuel a negative sentiment in the beginning, but the oversold nature of Nifty on the short term charts,
will help in a technical pullback
Support may come in at 11,036 and 10,965.
The Relative Strength Index (RSI) stood at 23.56 and made a yet another 14-period low, which is
However, the indicator did not show any bearish divergence against the price.
The daily MACD stayed bearish while trading below its signal
A large black body was formed on the charts
The size of the body signifies the intense selling pressure that Nifty sustained in the last hour and half of the trade.
As per pattern
analysis, Nifty has created a gap between 11,400 and 11,550 levels
This zone will act as a very strong resistance unless it gets filled up going ahead
Also, the index has drawn its expected trading range lower in the 11,050-11,400 zone
The index has a key double bottom support to look at near the 11,000 level.
If reactions to the coronavirus outbreak stay small, then a
pullback attempt cannot be ruled out
However, in the event of a continued correction, we would strongly recommend traders to avoid fresh short positions, as short term
indicators are deeply oversold.
We would recommend staying light on positions and keeping a highly cautious view on the market.
(Milan
Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research - Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
