11,000 is the last ray of hope for bulls: Sameet Chavan of Angel Broking

Terrible week for financial markets, 11,000 last ray of hope

It’s been a week of distress, intimidation and a lot of uncertainties for all equity markets across the globe. Until last week, probably no one had sensed how massive the overall adverse effect of Coronavirus would be. The moment it started spreading rapidly outside China, things became worse and this eventually resulted into a complete meltdown in global markets. For us, we saw some hope of revival on Thursday but Friday’s huge gap down followed by sustained selling poured water on it. Eventually, we concluded by registering the biggest weekly cut after 2008.

There was no respect shown for any major support as we saw breaching of crucial points one after another. Honestly speaking, no analysis works in such kind of fearsome environment. Although, the next path of action is solely dependent on further developments with respect to coronavirus; but still, let us see where we stand now and what are the next key levels to watch. At present, we are placed precisely at the 161 per cent retracement of the recent up move from 11,614.50 to 12,246.70. In case if the Nifty slides further, then the last ray of hope would be the lower end of multi-year ‘Upward Sloping Channel’ placed at 11,000. On the upside, Friday’s huge gap area of 11,384.80 – 11,536.70 remains to be an immediate hurdle. In our sense, if any sustainable recovery has to happen this week, it should be V-shaped or steep in nature. If that doesn’t happen and if the recovery is gradual, that would be an ominous sign for the bulls.
  

Momentum traders are advised to stay light and should avoid leveraged positions in such kind of global uncertainty. But having said that, historically it’s been proven that such panics generally offer very good opportunity for investors who are willing to build their portfolio. Hence, one should start nibbling into quality propositions.

Disclaimer: The author is Chief Analyst- Technical & Derivatives at Angel Broking. Views expressed are his own.