Index Likely To Witness Correction As COVID Weighs On Sentiment

As COVID cases exploded around the country and several state governments announced containment measures, the NIFTY’s irrational exuberance came to a screeching halt in Friday’s trade, falling 264 points. The bank NIFTY showed severe signs of weakness, collapsing nearly 1,000 points in the same session.

Momentum oscillators indicate that the correction that began after the mid-Feb peak is now roughly halfway complete, and the index is neither overbought nor oversold at current levels.

We are likely to see the markets processing all the weekend information on Monday, and a minor selloff cannot be ruled out early in the week.

The next strong support is at the 14,200 mark and then at the 13,600 mark, which is the lower BB level on the weekly chart. The index is making a bearish momentum crossover on the daily charts; another clear sign of an impending correction.

We are most likely staring at a drama filled, bearish week ahead.

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