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Market Headstart: Brace for a breakdown; Nifty likely to test 11,500 levels

Trends on SGX Nifty indicate a negative opening in India, with a 176 points loss. The Nifty futures were trading around 11,432-level on the Singaporean Exchange.

February 28, 2020 / 09:21 AM IST

The Nifty50 is expected to open with a gap on the downside on Friday tracking weak trend seen in other  Asian markets.

Global share markets headed for the worst week since the darkest days of the financial crisis in 2008 as investors braced for the coronavirus to morph into a pandemic and derail world economic growth, said a Reuters report.

Wall Street shares led the rout as the S&P 500 fell 4.42%, its largest percentage drop since August 2011. The Dow Jones Industrial Average fell 1,190.95 points, its biggest points drop ever.

Trends on SGX Nifty indicate a negative opening in India, with a 176 points, or 1.52 percent, loss. The Nifty futures were trading around 11,432-level on the Singaporean Exchange.

Nifty rollover for March series stood at 69 percent which is higher than the Feb series rollover of 66 percent, but lower than the 3-month average of 71 percent, data showed.

In Asian markets, Japan's Nikkei gave up 2.5 percent on rising fears the Olympics planned in July-August may be called off due to the coronavirus. Australian shares dropped 3 percent to a six-month low while South Korean shares shed 1.4 percent.

During the February F&O series, Nifty witnessed a fall of 3.34 percent while Sensex retreated 2.86 percent. Nifty Bank index fell 1.5 percent in the February series.Let’s look at the final tally on D-Street for Thursday -- Sensex shut shop at 39,745.66, down 143 points or 0.36 percent, while Nifty ended at 11,633.30 with a loss of 45 points or 0.39 percent.

The Indian rupee finished 6 paise higher at 71.59 (provisional) against the US dollar on Thursday amid easing crude oil prices and weakening of the greenback overseas.

On the provisional front, FPIs were net sellers in Indian markets for Rs 3127 cr while the DIIs were net buyers to the tune of Rs 3497 cr, provisional data showed.

FIIs have pulled out more than Rs 11000 cr from Indian equity markets so far in the month of February.

Big News:

Global markets resumed their plunge, wiping out more than $3 trillion in value this week alone, and US Treasuries yields hit record lows on Thursday as the coronavirus spread faster outside China and investors fled to safe havens, said a Reuters report.

The number of new coronavirus infections in China - the source of the outbreak - was for the first time overtaken by fresh cases elsewhere on Wednesday, raising pandemic fears.

The pan-European STOXX 600 index opened 2.3% lower and Italy's blue-chip index sank. Dozens of European companies have warned about potential damage to their profits.

In the United States, Microsoft became the second trillion-dollar company to warn about its results after Apple. X. Its Frankfurt-listed shares were down 4%.

The coronavirus outbreak may negatively impact global growth by 30 basis points or $250 billion, industry body PHDCCI said on Thursday.

According to the report, China is a major player in global trade, contributing around 13 percent in world merchandise exports, exporting majorly to the US, Hong Kong, Japan, Korea, Vietnam, Germany, India, Netherlands, among others, the impact on global trade would undermine the growth prospects of the world economy.

Technical View:

Nifty formed a bearish candle on the daily charts on Thursday forming a Hammer kind of candle on the daily charts.

Last 55 days of price action appears to have chalked out some sort of a down sloping channel from whose support Nifty appears to have bounced back from the lows of 11536 levels.

As long as this index sustains above 11500 levels some sideways consolidation with positive bias can be expected as Nifty is already in oversold levels with a vertical fall from the highs of 12,152 in last 5 consecutive sessions.

“On the upsides if it manages to close above 11687 levels then the pull back attempt can initially get extended to 11775 levels where as on the downsides a close below 11500 can drag it down further towards 11342 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

“At this juncture it looks prudent on the part of traders to wait for for consolidation and some signs of strength as fear factor appears to be dominating on the bourses,” he said.

Three levels: 11500, 11663, 11800

Max Call OI: 12000, 12500

Max Put OI: 11800, 11700

Stocks in the news: 

Pidilite Industries: Company to buy a 70 percent stake in Tenax India for Rs 80 crore.

GTPL Hathway: Promoter Jio Content to sell 43 lakh shares via OFS. The floor price for OFS set at Rs 63. OFS for non-retail investors to open on Feb 28 while OFS for retail investors to open on March 2.

IndusInd Bank - RBI approves appointment of Sumant Kathpalia as MD & CEO for 3 years w.e.f March 24

Technical Recommendations: 

We spoke to IndiaNivesh Securities and here's what they have to recommend:

Tata Motors | Buy | CMP: Rs 145.30 | Target: Rs 153 | Stop loss: Rs 138 | Upside: 5.3%

JSW Steel | Buy | CMP: Rs 252.90 | Target: Rs 266 | Stop loss: Rs 242 | Upside: 5.2%

Hindalco Industries | Buy | CMP: Rs 168.40 | Target: Rs 180 | Stop loss: Rs 158 | Upside: 6.9%

Disclaimer: The views and investment tips expressed by investment experts on are their own and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Kshitij Anand
Kshitij Anand is the Editor Markets at Moneycontrol.