Global sell off spooked market participants: Angel Broking
Daily Market Wrap Up by Mr. Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking):
"Despite unfavorable global cues, we kick started the session at the seven month high above 12000. However this gap up opening turned out to be a formality as we came off sharply in the initial trades. Markets stabilized from the hiccup; courtesy to complete recovery in banking stocks. Once again, this rebound got sold into which then became a nightmare for the bulls post the mid session as markets took a complete nosedive on the fears of a second wave of coronavirus hitting major European countries. This resulted in a similar trading session we witnessed on 31st August to mark more than a couple of percent losses.
Yesterday's smart recovery in the last hour was extremely encouraging and suggested an extension of the move. But global sell off poured complete water on this optimism and before anyone could realized, we were back to sub-11700 levels. Now, purely looking at charts, this down move should only be interpreted as a pull back towards the recent trend line breakout points. This coincides with the 20-day EMA level of 11600. Hence, all eyes would be on this level in the forthcoming session. However, since the fall has to do with the global uncertainty, it would be important to see how things pan out there and if things worsen, we may see the market correcting further. A close below 11600 would result in an extended fall towards 11450 - 11350 levels. And if things settle down and Nifty manages to hold 11600, we may see our markets resuming the recent uptrend. For the coming session, 11822 - 11900 is likely to act as intraday resistances.
There are a lot of ifs and buts at the end of today's weak session and hence, better to wait for further development to get the clear direction for next few sessions. Sectorally, IT was one of the leading sectors in the last few weeks but today it was the first one to trigger the selloff. Also, banking space disappointed today after yesterday's stupendous move. The midcap index continues to underperform and today, when stronger pockets gave up, the midcaps had to correct sharply. At present, traders are advised to stay light and keep a close track on all the above scenarios."