Markets corrected sharply amid negative global cues
Our markets corrected sharply in the first trading session of the week as the negative global cues continued to weigh negatively. The Nifty broke its important supports one after another as the broader markets witnessed significant selling pressure and the index ended the day below 19300 with a loss of over 250 points.
The week started with a continuation of the corrective phase, but this time it was not only the benchmark index but the broader markets (midcaps and small caps) too witnessed selling pressure. Nifty broke its important swing low support of 19330 and ended well below it. However, the data was already bearish for some time as the recent pullback move did not see any significant short covering or long formations. The short positions by FIIs are intact in the system with around 75 percent positions on the short side. The RSI oscillator gave a negative crossover in Nifty last week hinting at losing momentum. In the options segment, option writers have formed positions in 19400-19600 strikes while the highest open interest amongst puts is placed at 19000 strikes. Thus, until the data changes, we continue with our cautious approach to the market and advise short-term traders to avoid aggressive trades. The major support zone for Nifty is now placed in the 19000-18900 range and in case the index approaches this zone then one can look for some contra trades. On the higher side, 19400-19500 will now be seen as the immediate resistance zone on any pullback moves.
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