Nifty below 15,000: Has the market texture changed to sell on rallies from buy on dips?

As long as Nifty trades below 15150 zones, weakness could continue towards the next key support of 14800 and 14700 zones while on the upside hurdles are seen at 15250 and 15400 zones, suggest experts.

February 22, 2021 / 12:57 PM IST
Nifty50

Nifty50

Nifty50 slipped more than 1 percent pushing the index below the crucial psychological support level of 15000 for the week ended February 19 as bears took control. The index, which hit a life high of 15,431 on February 16 lost nearly 3 percent, or 450 points, since record high in a matter of days.

This raised a crucial question in the minds of investors – has the market texture changed from buy on dips to sell on rallies?

Weak global cues, profit-booking at higher levels as well as rise in US bond yields were some of the factors that slowed equity markets across the globe, suggest experts.

"The market was largely in a consolidation phase throughout the week following weak global cues. Bears took control of the markets across the globe as worries of increasing US Bond yield and inflation kept investors’ mood gloomy," Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

Experts are of the view that as long as Nifty50 traders below 15000-15100, bears would remain in control but, it the index manages to trade above 15000 and break above 15430 could open the door for fresh highs.

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"As index managed to breach to its strong support of 15k mark which will acts as an immediate resistance now so above 15k mark we may see some relief otherwise,” Rohit Singre, Senior Technical Analyst at LKP Securities told Moneycontrol.

“We may see more downside levels of 14900-14750 on the other hand 15100-15170 will act as a strong hurdle on the higher side," he said.

India VIX was up by more than 3 percent from 21.54 to 22.25. VIX needs to cool down and hold below 20 zones to attract support-based buying and again an attempt towards lifetime high zones with a higher market base, suggest experts.

On the options front, maximum Put OI is placed at 14000 followed by 15000 strikes while maximum Call OI is placed at 16000 followed by 15500 strikes.

“We witnessed Put writing at 14800 and 14900 strikes while Call writing was seen 15200 then 15000 strike. Option data suggests a wider trading range in between 14700 to 15500 zones while an immediate range between 14800 to 15200 zones,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited told Moneycontrol.

“As long as Nifty trades below 15150 zones, weakness could continue towards next key support of 14800 and 14700 zones while on the upside hurdles are seen at 15250 and 15400 zones,” he said.

What should investors do?

Well, the recent correction from highs is a healthy correction in a bull market which has given opportunities to long-term investors to invest in quality stocks at slightly lower valuations.

The global cues added to the uncertainties on reports of discouraging jobless data from the US and higher bond yields suggest experts.

The texture has turned slightly bearish but given the fact that last week's dip was largely on the back of weak global cues – we could see a bounce back from crucial support levels, but volatility will remain due to the upcoming monthly expiry on Thursday.

“Equities snapped their gains on the back of a rise its treasury yields at a one-year high and higher valuations weighed on the markets. The sharp jump in the crude oil prices also led to some profit booking during the week,” Rajeev Srivastava, Chief Business Officer at Reliance Securities told Moneycontrol.

“We expect the market to be volatile due to rollover movements in individual sectors and stocks with respect to derivatives expiry this week. On the higher side, the monthly resistance is placed at 15,300 levels. We expect a bounce from the lower range of 14680-14730 as being the previous top and weekly support levels,” he said.

Bulls and bears have been constantly trying to out-win each other and due to the lack of any major positives, Nifty couldn’t sustain the highs, but there is plenty of action in broader markets.

“No bull market can be a one-way up journey there will always be corrections on the way up but each dip should be looked at as an opportunity to get into the market and invest for the long term,” Nirali Shah, Head of Equity Research, Samco Securities told Moneycontrol.

“As benchmark indices have rallied in full swing over the last few months and valuations are getting overtly expensive, investors are turning towards the broader markets for opportunities that can continue to be a part of the Indian growth story,” she said.

Shah further added that small and midcaps may continue to remain in focus due to improved earnings visibility and the valuation gap in several pockets of stocks.

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.
Kshitij Anand is the Editor Markets at Moneycontrol.
first published: Feb 22, 2021 12:57 pm

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