“The Nifty could fall to 11,000 or 10,900 levels if it breaks 11,150. Our advice is to reduce weak long positions, if the index bounces to 11,300/11,330 levels,” said Shrikant Chouhan of Kotak Securities
The sharp selloff in the second half of the trading session pushed the Nifty below its crucial support at 11,300 and also its 50-Days Moving Average (DMA) placed at 11,273 on September 21. It ended the session 254 points lower at 11,250 levels.
The Sensex plunged by more than 800 points but managed to close above 38,000 levels towards the close of trade.
Sectorally, profit-taking was visible in telecom, realty, metals, automobiles and healthcare space.
Weak global cues; rising cases of COVID-19 across the world, which could lead to stricter lockdowns; and absence of any stimulus from the US Federal Reserve led to profit-taking in equity markets across the globe.
"Nifty had gone up by more than 50 percent from its lows of 7,600. This has been a significant move on the upside. But now, there is likely to be some nervousness in the markets given the uncertainty on the account of impending elections in the US. The Fed was expected to provide additional stimulus, which has not happened, and concerns around COVID still remain,” Mohit Ralhan, Managing Partner & CIO, TIW Private Equity, told Moneycontrol.He added that the earning season is going to start now and the market may pause and take further cues from the same.
So, what investors should do on September 22. Here's what experts say:
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities
Weak European market and concerns over the rising pandemic saw a sharp sell-off in the Indian market. The Nifty index lost 2.2 percent to end the day at 11,250.55.
The global market collapsed on concerns of the growing outbreak of the coronavirus. UK government gave an alert that the country is at a “critical point” in the COVID-19 pandemic and that a second lockdown could be needed to stop the renewed spread of the disease.
On Tuesday we expect the Indian market to remain under pressure. On the charts, the Nifty50 index has changed its trading range, 11300 which was earlier support levels for the index will now act as resistance.
Nagaraj Shetti, Technical Research Analyst, HDFC SecuritiesAfter showing sideways range in the last five-to-six sessions, Nifty slipped into a sharp weakness on September 21 and closed the day lower by 254 points.A long bear candle was formed, that has broken below the crucial lower support of 20-Days EMA at 11,415 and closed lower.The short term trend of Nifty seems to have reversed sharply. Now the market is set to show more weakness in the near term.The lower area of 11,100-11,150 is likely to offer minor support for the market in the next few sessions, but the market is expected to break below that support area in the near term.
The next downside levels to be watched at 10,700 in the next one-to-two weeks. The immediate resistance is placed at 11,300-11,350 for the short term.
Ruchit Jain (Senior Analyst - Technical and Derivatives, Angel Broking)
On the daily chart, we can observe the formation of a ‘Head and Shoulders’ pattern, and Nifty has closed right at the neckline of the pattern.
Thus, a continuation of the down move could lead to further sell-off, and hence, we continue with our recent advice for traders to stay light on positions and avoid overnight positions.
As far as levels are concerned, 11,185 and 11,110 are the intraday supports; followed by the short term support at the ‘89 DEMA’ which is around 11,940. On the flipside, 11,335 and 11,450 are now the immediate resistances.
Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.
After a sideways action in the last week, Nifty witnessed a steep decline on September 21. The selling pressure aggravated as the index breached its near term support parameters viz 20 DMA and lower end of a rising channel.
The near-vertical decline pushed the index down to the daily lower Bollinger Band. The Nifty is now approaching a crucial swing low of 11,185.
The overall structure, however, shows that the swing low is vulnerable to a break. In that case, the decline can continue till the August low of 10,882. On the flip side, any bounce towards 11,300-11,330 is likely to attract another round of selling.
Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services Limited
The Nifty index has been forming lower top - lower bottom on the hourly scale and witnessed a negative crossover on the Mechanical indicator on daily and weekly scale.
It formed a Bearish candle on a daily scale and heading towards its 50 DEMA which doesn’t bode well for the bulls.
Now, till it sustains below 11,333 zones then more weakness could be seen towards 11,111 and 11,000 zones while on the upside hurdles are shifting lower to 11,450 zones.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.