Markets enter long-term bearish trend

The Indian benchmark indices on Thursday suffered their biggest one-day crash in terms of points. The global markets also hit the lower circuits amid fears of the world economic recession over Coronavirus outbreak.

For the first time after 2008, the broader NSE Nifty has made the first major swing low and broken all the key long-term supports. Even the BSE Sensex and Nifty Bank indices were also in the complete bear grip. About 35 per cent of the listed stocks closed below their 52-week lows. The Bank Nifty has broken down the rising wedge pattern, which is a long-term bearish signal. As the market entered into a confirmed long-term bearish trend, it is better to avoid catching a falling knife. Most of the technical indicators showing an oversold condition.

To come out of this situation, the market may bounce and enter into a counter-trend consolidation. Generally, these counter-trend consolidation occurs when a steep fall or rise. We are already corrected more than 17 in just 35 trading sessions; the market entered category -2 corrections, which generally the fall will extend to 25 per cent from the top. To come out of the oversold condition, any kind of meaningful bounce to the zone of 10,800-11,100 can lead to a consolidation phase. There are many gaps in the current steep fall. The next level of support is placed at 10,000-10,100. If the Nifty failed retrace above the 10,800 level, the fall will continue till 10,000 level. This is the last hope for the supercycle bull market. In any case, if the Nifty breaches 10,000 levels, it all the way will fall up to 9,400-9,600 levels. Any kind of pullback without base formations can be considered exiting the existing portfolio.

(The author is a financial journalist and technical analyst)