NIFTY OUTLOOK & OPTION CALL PUT TIPS FOR 7 APRIL 2020

With negative closing on the mast week ended Friday, the market fell for seven consecutive weeks for the first time since June 2008. The Sensex and Nifty have cracked 33% each in the last seven weeks. The  Sensex crashed nearly 700 points on Friday, led by losses in banking stocks, as investor sentiment remained jittery amid concerns over the COVID-19 pandemic and its economic impact. After hitting a low of 27500 during the day, sensex ended 674 points, lower at 27590. Similarly, the Nifty 50 settled below the 8100-mark at 8083, down 170 points. Despite day to day volatility, the Nifty has witnessed a parabolic sharp downside if we look at the weekly charts. Presently, the weekly charts are deeply oversold and despite the tentative trade setup, a technical pull back can be positively expected. If the immediate intraday low is held, the chances of a technical pullback would increase even if there is no confirmation of any temporary base in place. 

The recent sell-off caused significant price damage in a very short period of time and hence the market is likely to oscillate in a broad range of 1000 points. Markets are likely to witness a period of correction going ahead with a mild positive to sideways movement for a week or two. We suggest traders go long if Nifty sustains above 8000 levels keeping that level as stop loss for long positions. We believe the market trend will continue to remain challenging until the fresh cases start to decline. Though the defensive pack is playing saviour, the damage in other sectors is more severe and that would keep the markets under pressure ahead also. In short, traders should continue with short bets while keeping the focus on risk management. The developments in the US, the events around oil prices and gold, and also the additional domestic fiscal measures would be the key factors which the markets would be watching as we move on to the next week.

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Resistance: 8500, 9000

Support: 8000, 7500