‘Selling clima' may have caused crash
THURSDAY’S session was a complete shocker for the domestic markets especially after a significant pullback of Wednesday. The benchmark indices started the session with a massive gap down opening following the fragile Asian cues. The world markets collapsed post the selloff in US markets during Wednesday’s session.
Yet again the market breadth turned in the favour of declining counters due to broad based selling in midcap and smallcap counters. On the sectoral front, Nifty PSU Bank and Nifty Metal stocks were the biggest losers whereas the Nifty Media counters outperformed the other groups. From the F&O space, stocks like Hindpetro (+16.61 per cent), MRPL (+11.25 per cent) and MCX (+6.88 per cent) underwent sharp recovery.
Despite Thursday’s sell-off the expected support zone of 10,100-10,000 is still intact. Also, as shown in the weekly chart of Nifty a hidden divergence is being observed in RSI which can lead to a short-term bottom formation. The magnitude of Thursday’s fall might be the result of a selling climax. Thus, the mentioned zone is expected to act as a major support going ahead and only a decisive move below the same might bring in further pessimism.
On the upside, 10,340-10,400 might now act as an intermediate resistance above which the pullback could get extended towards 10,540 mark.
For the past few months the stocks have undergone a strong rally and have corrected from the top.
Even the open interest data indicates heavy positions in the current and near series which indicates a bigger move.