With a 1.5 percent decline on March 13, the Nifty has formed another lower bottom preceded by lower top. The index closed below its 200-day SMA (simple moving average) and EMA (exponential moving average) both. The Nifty Smallcap index lost more than 2 percent and is on the verge of breaking the previous swing low of 9,053.
During Monday's session, huge volatility was witnessed where Nifty saw a fall of more than 400 points and Bank Nifty suffered a fall of more than 1,000 points to close below its previous swing bottom.
India VIX soared 20 percent and reached above 16. Rising VIX indicates rising volatility and rising fear in the market. Readings from the last six months indicates that VIX could extend its rise towards 23.
Stocks above 200 DMA in NSE500 index has reached below 45 percent, which indicates weak breadth. FIIs' have been sellers in Cash and Index future segment for last many sessions.
Supports for the Nifty are expected at 17,035 and 16,600, which happens to be the 50 percent and 61.8 percent retracement of the entire upswing seen from June 2022 low (15,186) to all-time high (18,887) made in December 2022.
The band of 17,500-17,550 seems to have become ceiling for Nifty in the short term and unless that is taken out on closing basis, traders should adopt sell on rallies approach.
Here are three sell calls for short term:
Eicher Motors: Sell | LTP: Rs 3,033.4 | Stop-Loss: Rs 3,150 | Target: Rs 2,850 | Return: 6 percent
The stock price has violated the crucial support of Rs 3,090 on closing basis. It took resistance at 200-day SMA in the recent pullback and resumed down trend.
Nifty Auto index has also formed lower top and lower bottom on the daily chart. Indicators and oscillators have turned bearish on the daily and weekly charts.
Persistent Systems: Sell | LTP: Rs 4,622 | Stop-Loss: Rs 4,800 | Target: Rs 4,300 | Return: 7 percent
The stock price has given bearish breakout from Head and Shoulder pattern on the daily chart. Stock price has confirmed lower top and lower bottom formation after long uptrend.
It has also breached 20-day EMA (Rs 4,805) support. Indicators and oscillators have turned weak on the daily chart.
Bandhan Bank: Sell | LTP: Rs 217.90 | Stop-Loss: Rs 227 | Target: Rs 202 | Return: 7 percent
The stock has been underperforming the banking index for last many months. Stock price has reached below the important moving averages.
Banking index has also breached the crucial support of previous swing low. Indicators and oscillators have been showing weakness in the stock.
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