Nifty Posts Biggest One-Day Drop in Five Years; India Volatility Index up by 21 per cent.
Market witnessed a bloodbath for second straight day on 9th March roiled by global sell-off in equities. Nifty and Bank Nifty have posted biggest one-day fall ever in an absolute terms. Nifty was down with 538.00 points or 4.90% to close at 10,451.50. Rising cases of Coronavirus outside China and its impact on economic growth has put investors in negative sentiments. Massive sell-off can be also seen in Crude oil as Crude prices plummeted more than 25 percent. Market breadth was totally in favor of sellers, about 1,413 stocks declined while only 175 stocks ended in green. Bank Nifty was down 4.79 percent to close at 26,470.20
As per weekly option data, highest put writing can be seen at 10,000, which indicates that if Nifty breaches 10,300, it can further continue its downtrend to test the support present at 10,000-10,100. As pull back rally is already due, Traders are advised to create fresh buying if Nifty managed to break the level of 10,800 on closing basis. For the coming trading session, 11,000 will act as a major resistance as maximum call writing can be seen here. We can witness short-covering move along with addition of fresh position only if Nifty manages to close above 11,000.
We can see a big momentum in following stocks:
Buy: Mahindra & Mahindra Limited (Above Rs 466)
Target: Rs 491
Stop Loss: Rs 445
Stock is forming reversal formation on daily charts and if it manages to break the level of 466, then we can further expect stock to move up to the levels of 500. Stock has major put writing at the level of 450, which makes this major a support level, breakout from the level of 466 would lead stock to witness bullish movement.
Considering the technical evidence discussed above, we recommend buying the stock above Rs 466 for the target of Rs 491, keeping a stop loss at Rs 445 on closing basis.
Buy: Bajaj Electricals (Above Rs 411)
Target: Rs 433
Stop Loss: Rs 394
Stock is witnessing resistance breakout from the level of 411 would lead stock to show bullish movement. Breakout from this level might lead stock towards its next resistance zone placed around 435. We can expect a good momentum in this stock for next few weeks.
We recommend buying the stock above Rs 411 for the target of Rs 433, keeping a stop loss at Rs 394 on closing basis.
Disclaimer: Technical Calls by Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor. The analyst does not hold position in any of the stocks mentioned above.