That sinking feeling: Analysts say Nifty could test 11,000

Technical analysts suggest Nifty could test the crucial support level of 11,000 this week. A fall below 11,000 could trigger fresh selling and push the index towards 10,700 levels. Stocks such as United Spirits, HDFC Bank, Maruti, Asian Paints and Ipca Labs can be good picks technically for 10-15 per cent upside in the short term, say analystsNAGARAJ SHETTISENIOR TECHNICAL RESEARCH ANALYST, HDFC SECURITIESHow Much could Nifty Fall Further?A long negative candle was formed on Friday with gap-down opening, which signals panic selling in the market. Normally, such market action at the lows could indicate formation of important bottom reversals. But, still there is no sign of any bottom formation at the lows. The near-term trend of the Nifty is down and some more weakness is likely, though a reversal is near. Being placed at the oversold region/near the next crucial support, there is a possibility of an upside bounce in the market from the lows of around 11,000-10,900 by this or next week. The formation/confirmation of bottom reversal at the lows could open up a decent upside bounce of around 450-500 points from the lows.Trading Strategies:Sell Biocon around Rs 286-295, target Rs 260, stop loss Rs 306 with a timeframe of two weeks. The stock price has formed a crucial top reversal at Rs 323.50 (Feb 24) and is currently on the verge of a downside breakout of the initial support at Rs 282. Buy United Spirits at Rs 687-665, target Rs 742, stop loss Rs 651 with a timeframe of two weeks. The recent correction seems to have completed. We observe a sharp upside bounce from the lows. We also observe formation of positive candlestick patterns in the last two sessions.AJIT MISHRAVP-RESEARCH, RELIGARE BROKINGHow Much could Nifty Fall Further?The Nifty has been trading in an up-trending channel on the weekly chart. It had tested the upper band of the channel in January while making a new record high at i.e. 12,430.5. We’re seeing decline since then and it has now retraced close to the critical support zone of 100 EMA on the weekly chart — which currently is around 11,200. Going ahead, the index could test the crucial support zone of the lower band of prevailing uptrending channel around 11,000 next week. And, any decisive breakdown below that level could trigger fresh selling and push the index towards 10,700 levels. In case of a rebound, 11,500-11,700 zone would act as strong hurdles.Trading Strategies:Despite the prevalent negative sentiment, investors should focus on accumulating quality stocks on dips, with medium- to long-term investment horizons. We still have a long list of outperformers from various sectors, which are not only bucking the trend but also attracting fresh buying interest. In other words, they should have a bottomup investing approach. For traders, it’s prudent to prefer hedged bets instead of naked trades. In the absence of any major domestic event, global cues, mainly the coronavirus news, would continue to dictate the market trend.ROHIT SINGRESENIOR TECHNICAL ANALYST, LKP SECURITIESHow Much could Nifty Fall Further?The index showed panic sell-off and closed the week at 11,202 with huge loss of more than 7 per cent on weekly basis, forming a bearish candle on weekly chart. The Nifty Bank closed the week at 29,147 with loss of nearly 6 per cent on weekly basis. Technically, the Nifty has good support near 11,100-11,000; if it manages to hold above these levels then we may see some relief rally towards the strong hurdle of 11,400-11,650 zone in the near term. The most concerning thing is India VIX which shot up 70 per cent last week; once we see some cool down in the fear gauge, we may see some stability in the markets. Derivatives data also suggest 11,000-11,200 zone will act as stiff support for the Nifty as healthy open interest is based on the said strike prices and we may see current downtrend momentum to get paused near the 11,000 zone.Trading Strategies:The index has good support near 11,000-11,100 zone. If it sustains above those levels, we may see some pull back. Some of the technical picks where investors can catch dips for a 10-15 per cent upside in short term, keeping stop out levels below 5-7 per cent from current close, are HDFC Bank, Maruti Suzuki, Asian Paints and Ipca Labs.

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