Last week optimism gone for a toss, 11800 - 11750 to watch out for: Angel Broking

Daily Market Wrap Up by Mr. Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking):

"We had an extended weekend in our markets but when we started the new trading week, things on the global front had changed quite a lot, especially from where we left on Thursday. The mounting concerns over 'coronavirus' spooked traders across the globe and in the midst of this, we had a massive gap down to kick-start the week. Within no time, we were below 12000 considerably and in fact, after a small bout of consolidation, the selling reinforced in the latter half to conclude the day with a colossal cut over a couple of percent.

The way we shaped up at the end of the last week, things looked brighter and possibly poised for some good up moves in the last week of the February month. In fact, we had mentioned a 'bullish Island reversal' pattern in our earlier article. With today's gap down and a follow through selling, the bullish implication of this pattern has certainly gone for a toss. Today, we breached few key levels one after another and are trading around a crucial juncture now. Next 2-3 days would be quite important for our market in order to dictate the near term direction. If we manage to hold 11800 - 11750, we may see some respite and expect a pullback in coming days. But failing to do so will lead to strong corrective moves to test 11600 or may even slide below that. Thus, traders are advised to stay light and avoid taking undue risks. On the upside, 11900 followed by 11950 would now be seen as immediate hurdles.

The banking index which is considered as a high beta index, fortunately we saw some outperformance as compared to the Nifty and the damage in Bank Nifty is not as severe as it generally should have been. So, if Nifty has to find some support and give a bounce back, the banking stocks need to chip in heavily. On the other hand, if this basket starts correcting in the forthcoming session, then we are heading for some decent correction. Also, the midcap index which looked slightly better in the first half finally had to succumb to the sell off and hence, has seen sharper cuts in the latter half."

Source : Equity Bulls

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