Nifty Analysis: Outlook and Trend for 16th Mar 2020

Medium Term Trend: ↓Down (Changes to up above 10900)

Rollercoaster Ride: After taking a severe beating Nifty opened with another gap down and within minutes hit the lower (10%) circuit. When the trade resumed after 45 mins it moved up smartly to above 10k to close at 10020 levels, (adj close 9950) recovering more than 1400 points from day low.

Yesterday we had mentioned that "this is not the time to be scared or to be afraid. Agreed what we are seeing is exceptional but exceptional times offers exceptional opportunities. This is the time one should start investing in good quality stocks from long term perspective (5-7 years)"

Adding stocks around 9k levels in the morning session has already given a return of ~10%. Most stocks are up more than 15-20% fromn their opening lows.

We had also mentioned that "Now though Nifty has turned 9500, the weekly rsi is still at 23 so we can fall a bit more (9000-9500 broadly is the range). Nifty has turned way too oversold so one bounce back is definitely pending now which can take nifty back to above 10K levels"

Thats how Nifty played out todays session, it fell below 9k but immediately triggered circuit freeze and when it opened again, it opened around 9k and then  went on to move above 10K. It hardly spent anytime below 9k levels.  

At 9k levels Nifty had seen parity with the 3 major falls we have seen in the history of Indian stock markets past ( 1992/1993 Harshad Mehta, 1999/2000 Dotcom bubble & 2008-Lehman crisis). So the common sense says that worst is over. Of course volatility can and will continue for some more time and we can once again visit the lower levels, not denying that. All we are saying is that worst seems to be behind us now and like we said yesterday, this is the time to build a good portfolio with good quality stocks. More weakness below todays lows, will be unprecedented, never seen in history of Indian markets and could only mean that the end of the world is near (which we all know is not going to happen) so the chances are Nifty could and should recover from these levels ( slow or fast that we need to observe, both are a possibility)

As far as trading is concerned , its very difficult to give levels as the volatility is so high (VIX is sitting at 50). Bounce which we have seen was long pending and had to come more important question is what now. To build further strength Nifty needs to cross many hurdles, It first needs to trade above 10K and then make a move above 10500 levels. That will be the first sign that correction is getting over , a move above 10900 levels would then change the medium term level to up once again.

For less risky traders, it wont hurt to keep trading aside and focus on building a portfolio.

Happy Trading!