BLOODBATH IN NIFTY: Is it over or should we expect more?
Feb 2, 2018, has been recorded as a “Freaky Friday” in the books of Stock Market as the benchmark index lost over 250 points in a single trading session, wiping off over 5 lakh cr. of investor’s wealth. This severe post-budget fall was caused by the substantial changes in the Long-Term Capital Gain regime that was levied on the FIIs and Mutual Funds. This nose-diving fall may seem enough for now for the investors to digest, but is it the end or the beginning of a long-awaited correction in the market, still remains unanswered.
From the aforementioned chart, it is quite evident that Nifty-50 has formed a solid bearish candle, thereby jumping all walls of worry. The Fibonacci Retracement levels show that on Feb 2, 2018, the index took support near the 61.6% retracement level that was placed @ 10737, thus curbing the fall. However, it cannot be overlooked that Nifty-50 has offered a convincing close below the Pivot Level which was supported by above average Volume on the respective day. In addition to this, the selloff in the final session (post 1:30 pm) of trading on Feb 2, 2018, indicates fresh shorting in stocks and index as there were no signs of recovery what so ever. The options data further solidifies the fact that we may be heading towards a bearish weak as there was severe wind-up witnessed in 10600 PE & 10550 PE, thereby opening the gates for further southward movement. To complement this, the weakly chart of Nifty-50 has shown a bearish engulfing, bringing in more negative sentiments.
In short, some bearish action can be expected in the market in the coming week with crucial support @ 10600 (50% retracement level) & 10550 (pivot high level). For the market to show any positivity, 10875 & 10950 may act as key levels of resistance.
- Anand Singh Gaur
- Sunil Kothari