Marquee names succumbed to the selloff, 11300 becomes a key support now: Angel Broking
Daily Market Wrap Up by Mr. Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking):
"Last week's mayhem continued as we saw a gap down opening followed by a sustained selling throughout the first half. This sell off was disheartening because the stable propositions like HDFC Twins and Kotak Bank also finally succumbed to the broader market destruction. These marquee names have been reluctant to correct since many months and in fact, have propelled index to the record highs. But today, they looked completely dejected and hence, this correction reinforced to test the 11300 mark. Fortunately, the selling got arrested in the latter half and we had a small bounce back to eventually close around 11350.
Our benchmark has fallen quite a bit in last three days and in this course of action, within no time, we are off record highs by more than 5% now. Looking at the daily chart, we can see index reaching its major support zone of 11300, which coincides with the 'Multi-month' trend line (drawn by connecting October 2018 and February 2019 lows) as well as the 78.6% retracement of the entire rally from 11108.30 to 12103.05. Considering this important junction, a possibility of some relief in next couple of days cannot be ruled out. In this scenario, 11400 - 11450 may be retested. However having said that, the overall chart structure has been distorted and till the time we are below 11650 - 11700, intermediate rebounds should only be treated as short term relief. On the flipside, a sustainable breach of 11300 would extend this correction towards 11200 - 11108 levels.
At present, traders are advised not to trade aggressively and should refrain from catching falling knives from high beta universe. However, we still believe that, traders / investors with a slightly broader perspective, should accumulate quality propositions in staggered manner in this ongoing decline. Few positive take away from today's session are the strong upsurge in Reliance Industries in last hour and the recovery in the 'Midcap' index from its crucial support. These observations certainly bode well and hence, traders should capitalise on extension of these moves."