After The Bell: Sensex holds above 50K on a volatile day, what should investors do on Tuesday?

Market Outlook

Smart recovery towards the close of the trade on March 15 suggests that the bulls are not ready to give up yet, as the S&P BSE Sensex closed above 50,000, while the Nifty stayed away 14,900, both crucial support levels.

At close, the Sensex was down 397 points, or 0.78 percent, at 50,395.08 and the Nifty was down 101.50 points, or 0.68 percent, at 14,929.50. Sectorally, buying was seen in metal, power, utilities, IT, and public sector, while selling pressure was visible in energy, finance, healthcare, and capital goods space.

On the broader markets front, the BSE midcap index was down 0.7 percent and the smallcap index fell 0.53 percent.

On the technical chart, the Nifty closed below its 5-day EMA and formed a small bearish candle that looks like a Hammer with a long lower shadow. The Nifty Bank formed a bearish hammer candle on the daily scale with a long lower shadow.

“Markets opened in the red on the back of weak cues and drifted lower on higher WPI and partial lockdown in certain states,” S Ranganathan, Head of Research at LKP Securities said.

“However, a spirited rally in metals and IT stocks in the afternoon trade with support from financials helped the indices recoup part of the losses,” he said.

Experts are of the view that crucial support for the index is placed at 14,800-14,750, while on the upside, traders should wait for a breakout above 15,250-15,270 levels.

Here is what experts suggest investors should do on March 16:

Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services Limited

The Nifty formed a Bearish Hammer sort of candle on the daily charts with long-lower shadow, indicating declines were being bought in the market. It continues its lower lows formation from the last two sessions and got stuck in a range.

Now, the index has to decisively cross and hold above 15,000 to witness an upmove towards 15,150 and 15,250, while on the downside, major support exists at 14,750 then 14,600 levels.

Rohit Singre, Senior Technical Analyst at LKP Securities.

The Nifty opened the day with mild gains but failed to sustain on the positive side and saw a sharp slide to close the day on a negative note at 14,929 with a loss of nearly one percent.

The index showed some pullback after touching its rising trend line on the daily chart, 14,750 will be immediate and strong support. If the index would manage to hold it then some more pullback towards the immediate hurdle zone of 15k mark followed by 15,100 is possible.

Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas

The Nifty seems to be starting the next move on the upside after forming a base above a falling trendline. A larger structure shows that post-consolidation near a medium-term rising trendline, the index is resuming the larger uptrend.

The short-term momentum indicators are in line with the bullish expectation. Momentum can pick up sharply once the swing high of 15,273 is surpassed.

The daily upper Bollinger Band nearly coincides with the all-time high of 15,431, thus making it a crucial short-term target. On the other hand, the support zone gets shifted higher to 15,000-14,925.

Ashis Biswas, Head, Technical Research at CapitalVia Global Research Limited

The Nifty witnessed some swift recovery from its short-term support of 14,800.

The expected level should range between 14,950 and 15,300 and it is going to be crucial for the short-term market scenario to sustain above 14,800 to keep the long-term uptrend intact.

While it is subject to further price action evolution, it is prudent to wait for a decisive breakout above 15,000 and technical factors to improve before going long in the market.

Traders are advised to refrain from building a new buying position until further improvement is seen and a breakout above 15,000.

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