The Nifty opened sharply higher but slipped after the Reserve Bank of India announced a raft of measures, including slashing interest rates on March 27. Global markets saw a mixed day, as traders kept a close watch on the spread of coronavirus.
The index ended a volatile session tad higher to form a bearish candle on daily charts as the closing was lower than the opening tick. For the week, the Nifty lost 85.2 points but formed a large bullish candle on the weekly scale as Friday's closing was much higher than Monday's opening.
Experts advised traders to wait for consolidation before taking any positions and said the 9,000 level would play a crucial role in the coming week. If the index climbs and holds then there could be a positive trend.
The Nifty started off the April series on a strong note at 8,949.10 and hit an intraday high of 9,038.90 but after RBI press conference, the index wiped out those gains to hit the day's low of 8,522.90. It managed to close at 8,660.25, 18.80 points higher.
"Despite a strong gap-up opening, the Nifty50 failed to hold on to its gains, which resulted in a bearish candle on intraday charts, hinting that profit booking might have kicked in from psychological resistance point of 9,000 levels, which was also interestingly placed around the resistance point of 13-day EMA (8,933)," Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
Hence, unless the Nifty manages to sustain above 9,000 in the near term, further upsides should not be expected, he said.
A close below 8,500 will trigger a short-term downswing, with eventual target placed in the 8,100–7,800 zone, he said.
If the Nifty manages to sustain above 9,000, then upward swing shall get extended into the 9,311–9,390 zone, which is 38 percent of the Fibonacci retracement levels of the entire fall from the highs of 12,430–7,511, he added.
The Bank Nifty outperformed the benchmark Nifty50, rising 355.10 points or 1.81 percent to close at 19,969 but formed a bearish candle on daily charts, as the closing was lower than opening.
"The Bank Nifty in the first half saw sharp upmove, outperforming the benchmark index. The RBI’s positive action on rate cut did not surprise the market and it was a classical case of sell on news. The index managed to get closer to our target zone of 22,000 and we believe after some pause, further gains are likely for the index," said Amit Shah, Technical Research Analyst with Indiabulls Securities.
For the week, the Bank Nifty declined 348 points but formed a bullish candle on the weekly charts, as Friday's closing was higher than Monday's opening.
Shah continued with the target of 22,000 for the index. He sees the near-term support for the index at 19,000.