Some respite after recent turmoil, 8000 becomes key support: Angel Broking
Weekly Market Wrap Up by Mr. Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking):
"Last Friday's decent recovery was followed by a huge gap down on Monday as there was sudden spike seen across the globe as well as in India in corona virus infected numbers. The sell off along with global peers augmented to hit a fresh 3-year low at 7511.10. Things looked extremely scary at one point as so many stocks were falling as if there is no tomorrow. Few all time favorites like HDFC Bank, Bajaj Finance etc. considered a safe haven stocks also had to succumb to this melt down. Fortunately, the global markets saw sharp recovery thereafter which resulted into a respectable rebound in our market as well. Eventually, the Nifty ended the action packed week by paring down almost all losses.
Barring Monday's mayhem, our markets managed to clock gains for four consecutive sessions, which was rare to see in last couple of months. But practically speaking, all markets across the globe were extremely oversold and hence they needed some reason to rebound. Globally the relief move started after the announcement of hefty stimulus packages from US Federal Reserve. Looking at the governments and central banks' efforts worldwide, hopes were built for similar sort of measures from our Finance ministry and RBI as well to support the economy. Finally, the sell off arrested and we are now considerably off Monday's low. Technically speaking, the Nifty has managed to close above '5-day EMA' after so many days. In addition, the RSI-Smoothened on daily chart has confirmed a classical positive crossover from deeply oversold position. Purely looking at these observations, a possibility of extending this relief move towards 9150 - 9350 cannot be ruled out. But as we all know, we are currently in a very abnormal phase and hence, all conventional theories of market research can go for a toss. So rather than blindly depending on these pointers, the real path of action would be decided on how things pan out with respect to the corona virus pandemic.
As far as supports are concerned, 8500 followed by 8000 would be seen key supports. Traders are advised not to take aggressive / leveraged bets and should ideally keep booking profits on a regular basis. For a time being, the strategy would be to take one step at a time and keep focusing on quality names. The entire world is fighting against this health crisis and we hope it disappears soon."