Index trend and stocks in action January 09, 2020

Yesterday, Nifty had a very jittery and shaky start, as tensions between the US and Iran increased. Thereafter, the index spent the remaining session attempting to recover from lower levels. It managed to recover almost 95 points from the day’s low and defended the 12k mark on a closing basis.

The price action for the day formed a bullish candle. This pattern resembles the counter attack of bulls from the lows but it is not a perfect text book formation. The one key takeaway from Wednesday’s session is that despite a gap-down opening, there was no follow through selling activity, thereafter, and bulls managed to close near its day's high. The level of 11,900 is a crucial support for Nifty in the near term, followed by 11,800 mark. Meanwhile, on the upside, the sizable bearish candle, formed with an opening downside gap on January 6, is still intact and any pullback attempt may find hard to cross this downside gap.

Despite the recovery from the lower levels and managing to close above the 12k mark, Nifty is not out of the woods completely and is likely to witness bouts of volatility. In the near term, the level of 11,900 will be a crucial support and, on the upside, the range of 12,150-12,200 is likely to act as a stiff resistance for the index.

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