Correction in markets deepen, Nifty slips below 14,600 mark; Asian Paints shines

Update: The fall in the Indian markets extends as Nifty slips below the 14,600 mark while Sensex is seen hovering around 49,100 mark. Only 5 out of 50 stocks of Nifty 50 are trading in green. The top contributors for the index so far are Asian Paints and Cipla while on the other hand, the top draggers include Reliance Industries and ICICI Bank. 

India VIX jumped nearly 8 per cent and surged above the 22 mark. Amongst the sectoral indices, Nifty Metal and Nifty PSU Banks emerged as the top losers.  

Global Cues: Dow Jones Futures was up by a quarter of a per cent. Meanwhile, the European stocks traded lower amid renewed concerns over the global economic outlook as the Coronavirus cases surged in Europe and renewed lockdowns.

Update: The Indian benchmark indices opened Wednesday’s session on a negative note and as the day progressed, selling pressure has exuberated. With this, Nifty slipped below the 14,700 mark and Sensex is seen hovering close to the 49,500 mark. The broader markets too were in negative terrain with Nifty Mid-cap being down by 0.51 per cent and Small-cap inching lower by 0.71 per cent. Amongst the sectoral indices, the majority of the sectoral indices are in red with Nifty Metal down by more than 2 per cent. On the other hand, Nifty Pharma was trading in green.

The bulk of the fall has been witnessed in the past half an hour as Nifty slipped about 100 points, owing to the reports that Maharashtra CM is likely to put more curbs in Mumbai, Pune, Nagpur, Nashik & Thane.  

It was yet another high volatility session on D-Street as Nifty moved in a range of about 170 points throughout the day. Nifty began the session on a positive note and thereafter, it extended its gains, aided by a strong rally in banking stocks. However, the index soon pared its gains and touched a low of 14,707 levels.  

In the second half of the trading session, Nifty saw a decent recovery from the day’s low and rebounded about 110 points from the lows made during the day and closed with gains of just over half a per cent.   

The price action of the day formed a small positive candle, carrying shadows on either side. Technically this pattern resembles a high wave pattern, which indicates high volatility in the underlying. Nifty has reclaimed its 50-DMA after three days of trading below the important moving average. Further, it has also closed above Friday's high.   

In the prior session, we had seen the formation of Doji and inside bar while on Tuesday, we saw a decisive close on the Doji+ID/NR4 bar, which is considered to be positive. With this, Nifty has achieved our near-term target of 14,850-14,870. Going ahead, if Nifty sustains above the 50-DMA, which is currently placed at 14,769, it’s likely to test the levels of 14,950-14,970 as the 61.8 per cent retracement of the last leg of fall from the highs of 15,336 to 14,350 is placed in this region.    

Our advice to traders would be to remain focussed on stock-specific opportunities rather than chasing index moves until and unless there is evidence that a decisive trend has been established.