The Indian market witnessed a knee-jerk reaction on August 3 following weak global cues and uncertainty over recovery as rising coronavirus cases across the globe weighed on sentiment.
The risk of rising NPAs and a possible extension of the moratorium period beyond August 31 also dented sentiment, with D-Street eyeing the outcome of the RBI policy meet on August 6.
Investors should tread cautiously as the Nifty50 has broken below its crucial support at 11000 and as long as the index trades below it, the next big support is placed at 10,800-10,750 levels.
The market witnessed selling pressure for the fourth day in a row and the Nifty shed over 175 points from the day’s high.
The intraday fall was mainly due to heavy selling in the Bank Nifty, especially private banks and financial and energy stocks.
“Technically, from the high of 11,341, the Nifty has corrected over 450 points. We are of the view that the short-term trend for the index remains weak. However, the strong possibility of a pullback rally is not ruled out if the Nifty trades above 11,000,” Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities told Moneycontrol.
“In the short run, the 11,000 level should be considered as a trend-decider level. Trading below the same could see the Nifty correct up to 10,850-10,820 levels. On the flip side, above 11,000 may trigger a quick relief rally up to 11,170.”
Also Read: Gainers & Losers: 10 stocks that moved the most on August 3
We have collated views of experts on what investors should do on August 4 when the market resumes trading:
Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The Nifty seems to have witnessed a reversal from near the key overhead weekly resistance at around 11,300 levels in the last week (resistance as per change in polarity).
A follow-through weakness during the week after a reversal of last week and the significance of overhead resistance point towards more downward correction, as per smaller and larger timeframe charts
The short-term trend of the Nifty has reversed and the recent swing high of 11,340 could be considered as an important top reversal pattern and this area is unlikely to be breached in a hurry.
Further weakness can be expected in the market in the coming sessions. The next downside level to be watched is around 10,600, which could be seen in the next one week. The immediate resistance is placed for any pullback rally is at 11,075 levels.
Rohit Singre, Senior Technical Analyst at LKP Securities
The index started the week on a negative note and closed the day at 10,900 with a loss of 1.57 percent, forming a bearish candle on the daily chart.
The index again retraced below the 11,000-mark and if it continues to trade below it, then we may see some more cuts towards immediate support zone of 10,800-10,730. Resistance is coming near 10,950-11,000 zone, strength will be back only above the 11k mark.
The Nifty Bank closed the day at 21,072 with a loss of nearly 3 percent. It closed the day near its crucial support zone of 21,000 and any break below the mark will see more pressure towards 20,500 and resistance is coming near the 21,350-21,700 zone.
Ajit Mishra, VP - Research, Religare Broking Ltd
Markets may remain in the consolidation phase as there is high uncertainty regarding COVID-19 situation as unsupportive global cues.
Along with RBI monetary policy (scheduled on August 6), market participants will keep a close watch on global cues (announcement of the additional stimulus package, macro data and US-China tension) as well as fluctuation in crude oil prices.
Investors must opt for value-buying in select pockets to build a long-term portfolio. Now, the next support for the Nifty exists at around 10,750-10,800 zone.
Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas
The Nifty witnessed follow-through of the Dark Cloud Cover— a bearish candle that was formed on the weekly chart in the previous week. On August 3, the bears dominated the index right from the beginning of the session.
As a result, the Nifty saw sustained selling throughout the day. On the way down, it broke the key support zone of 11,050-11,000 as well as the 20-DMA. Thus, the index is now set to tumble towards the swing low of 10,563 in the short term.
On the flip side, 11,000-11,050 will now pose as a resistance zone as per the principle of Role Reversal.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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