Index trend and stocks in action on February 25, 2020

The signs of what happened on Monday were already visible on the charts as Nifty was not able to cross above 50-DMA despite of 244 points surge and also, the formation of bearish candle helped us to predict beforehand. Nifty opened gap down and it shifted into a range movement before succumbing to selling pressure. As the Nifty lost a staggering 251 points to end near the day’s low, all Nifty50 stocks ended in red.

The price action formed a sizable bearish bar and it has breached its key support of 100-DMA. The spread between high to low i.e. the difference between high to low was almost twice of the 10-day average and the spread was one of the highest since Budget Day. Currently, Nifty has retraced more than 61.8 per cent of the up move which started on February 3. And, as per the rules of trend strength, as indicated by the percentage of retracement by John Hayden, the uptrend has turned weak as it has retraced more than 61.8 per cent. Nifty broke several crucial supports and is now staring at a gap of February 4 (11,749-11,783).

Going ahead, on the upside, the zone of 11,900-11,930 is likely to act as a stiff resistance. On the downside, the failure to hold the gap area of February 4, could lead to further downside and Nifty may re-test its swing low of February 3.  The daily 14-period RSI is placed at 40-mark. The daily MACD is bearish, as it trades below its signal line. Further, MACD is presently below its centre line. All-in-all, the short-term scenario continues to be negative and with this gigantic fall, which has clearly given a signal of bearishness and hence, sell on rallies strategy would be the preferred strategy for the traders.

TVS Motor: At TVS Motor Company, the outbreak of pandemic Coronavirus (COVID-19) has led to an impact on the supply of certain components for production of BS-VI vehicles. While TVS Motor’s direct dependency on China is limited for components, some Tier II suppliers have been impacted adversely, which will lead to 10 per cent drop in the planned production in February 2020.

Camlin Fine Sciences: The manufacturing facility of the company's subsidiary viz. CFS Wanglong Flavors (Ningbo) Company Limited located in China has resumed operations.

JSW Steel: The company was declared the preferred bidder for Jajang Iron Ore block in the state of Odisha.

Tech Mahindra: Approval of proposal for the acquisition of 100 per cent stake in Zen3 infosolutions (America) Inc.