Euphoria ends with a massive sell off on global jitters: Angel Broking

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

"Markets have been enjoying a strong Bull Run over the past two months now. Last week, the benchmark index hit a fresh record high above 13700 and today too despite having some sluggish start, Nifty managed to post a new high of 13777.50 in the initial hours. However, some fresh unfavorable developments over the weekend with respect to COVID-19 in major European countries spooked traders across the globe post the mid session. The initial profit booking then turned into a massive sell off in the latter half to shed more than 600 points at one point. Eventually, the Nifty ended the session with over three percent cut to mark its biggest intraday loss in the last few months.

Today's correction finally validated our recent cautious stance and this is how the market generally traps market participants. Despite the market hitting new record highs in the last couple of weeks, we have been repeatedly advocating on booking profits and staying light. It might have looked silly but we remained firm on our stance, which finally paid off. Now, the brakes have been applied to the recent euphoria and for a time being, today's high will remain a record high for our markets. With today's sharp fall, we can see the last twelve day's gains going for a toss, a classic revenge from the mighty bears. For the coming session, any bounce back towards 13450 - 13550 is likely to get sold into; whereas on the lower side, Nifty has reached its first level of retracement i.e. the '89-EMA' level (13100) on the '180-minutes' chart. Ideally, the next level of the natural profit booking is around 12800, which is the '200-SMA' level on the same time frame chart. But before this, today's low of 13130, would be seen as immediate support for the index.

Traders are continuously advised to stay light and avoid taking contradictory bets in the coming session. With a larger view, this correction should be interpreted as a healthy sign and it will certainly provide better opportunities to enter marquee names on correction. But for momentum traders, the way chart structure seems distorted; it has certainly dented the recent optimism."

Source : Equity Bulls

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