Dow Jones Futures at days low; Sensex weighs down by banking & financial stocks, crashes by 500 points

Update:  Indian markets failed to sustain at higher levels and drifted lower after weighing down by banking and financial stocks. Around 29 out of 50 stocks were trading in red in Nifty50 while in Bank Nifty, 11 out of 12 stocks traded in the red. Meanwhile, India VIX jumped over 5 per cent to 21.   

Global Cues: Dow Jones Futures is down by 130 points and trading near the day’s low.   

Stocks in action: 

Havells: Havells launches Stealth Puro Air, India’s first air purifying ceiling fan with three‐stage filtration.   

Prakash Industries: The board of directors in its meeting held on March 22, 2021 have allotted 75,00,000 numbers of equity shares at a price of Rs 44.10 to the said warrant holder.   

KNR Constructions: The company has received LoA for four-laning of Bangalore-Mangalore section including six-lane flyover in Kalladka town on NH-75 on an EPC basis in the state of Karnataka.  

Update: Indian markets have witnessed a smart recovery from lower levels as Nifty has recovered almost 70 points from the day’s low. Amongst the sectoral indices, Nifty Pharma has surged 1.22 per cent, followed by Nifty Realty. On the other hand, banking & financials are seen under some pressure in the early trade.   

In the pharma sector, Aurobindo Pharma near futures are most active with 2,378 contract traded while Dr Reddy’s near future is trading at a maximum premium and showing long built-up.   

Stocks which have recorded fresh all-time highs in today’s session are Adani Total Gas, Adani Green, Orient Electric, Kabra Extrusion Technik, etc. The stock of Adani Green got locked in the upper circuit soon after the company receives LoA for 300 MW wind power project.   

The bulls exhibited a splendid performance as Nifty recovered almost 400 points from the day’s low and recorded gains of 1.28 per cent. With this, it broke Friday’s jinx as for the last five consecutive Fridays, Nifty had recorded a negative close. Despite posting spectacular gains last Friday, it ended the week on a negative note due to four consecutive days of losses recorded in the week. On a weekly basis, Nifty ended down by 1.91 per cent.   

The price action of the day formed a candlestick pattern, which resembles a bullish piercing candlestick pattern, and this pattern is considered as a bullish reversal pattern because it is found at the end of a downtrend. Besides, on a weekly basis, Nifty had formed a bear candle, which contains a long lower shadow while the long lower shadow signifies that the index tested its support, where demand was located & bounced back.  

Structurally, there are several bearish signs visible on the charts, as Nifty has violated a rising trendline, the 50-DMA and on a weekly basis, it has closed below the prior week’s low. Despite the structural damage, the gap area of 14,470-14,330, which was created on the following day of the Union Budget, provided support to the bulls. At present, the index is hovering near its 50-DMA. Going ahead, the opening on Monday and the price action thereafter is crucial to watch out for as sustaining above the 50-DMA and closing above the same would indicate that the bulls would extend their stay on D-Street as the 50-DMA has worked as strong support in the recent past. Last time, after one or two days of the breach, Nifty bounced back sharply and went onto register all-time highs. In the current scenario, Nifty is below the 50-DMA for the last two days. So, a close above this trend indicator is a sign that this was a trap. Hence, the 50-DMA (14,748) levels would be watched by traders closely.   

On the indicators’ front, the weekly RSI is above the 60-mark while on the daily chart, it has bounced back from the level of 42. Historically, the zone of 40-45 has proved to be good support. On a weekly chart, the MACD histogram turned bearish and the MACD line is below the signal line for the first time after the last week of May.  

Overall, the index is placed at a crucial juncture, and the 50-DMA could be a deciding factor for Nifty in the coming days. Meanwhile, on the downside, the 14,440 level is likely to act as a support for the index and on the upside, 14,780, followed by 14,905, is likely to act as a resistance for the index.