Market has already seen EquityPandit’s predicted bottom.

-Now What?

-Will market correct more?

-Should we exit our investments?

EquityPandit would answer all your queries in this follow-up article, so that you can take a better and informed decision.

In our previous Special Report (when Nifty was hovering around 10400 levels) And based on the chart of Nifty, BankNifty, Dow and some index heavyweight we tried to predict where the Indian Stock market is headed and where the bottom could form. We also suggested traders and investors with some strategies that they should do in such market conditions. You can read the previous report at the below link:

Special Report [Part One]: Where Is The Indian Stock Market Headed?

In our previous article we suggested that if Nifty broke levels of 10028 then a big panic selling would seen in the market and Nifty would surely head towards 8900-9119 levels where it may see the bottom. Once market breached 10028 levels for Nifty, it sharp fell down and within three days Nifty has breached our predicted target level of 8900. However on March 13, 2020, market fell down to 8555 and saw a lower circuit. After halt of almost one trading hour, it resumed and market saw a sharp pullback to close at 9955. In our last report, we clearly suggested investing maximum at levels of 8900 for Nifty and if investors have invested at those levels then they are already in good profits.

Now let’s go more into Technicals of that historical day when we saw a 10% lower circuit..

Now first let’s look at Nifty monthly chart:

If you see the above chart or the chart we posted in our last report, Nifty Fibonacci retracement levels are: 10028, 8543 and 6141 (which were already marked in the chart in our previous report). Coincidentally, Friday’s low on Nifty was 8553, exactly the levels mentioned by us. So as of now, we can say that Nifty has completed its retracement target.

Also if you look at the chart, we have plotted trend line which connects year 2015 high and year 2016 high. Nifty on Friday has just touched that trend line support level of 8650 and bounced back more than 1400 points from those levels. Nifty managed to close above year 2015 high of 9119. So again we believe that market has made bottom for short term.

Now let’s look at BankNifty chart:

BankNifty made low of 21351 and closed at 25162 levels. Fibonacci retracement levels are: 25698, 21421 and 14506. BankNifty also completed its retracement targets. Also it just rebounded from high of year 2015 which was at 24000 and acting as a strong support. So in BankNifty also we believe that bottom has been formed.

What if these levels get breached?

For Nifty as well as BankNifty, backed by some worst news, if it breaks Friday’s bottom ( which it should not) then we firmly believe that global economy would see recession and market would end up with further correction of 30% to around 6000 levels for Nifty. But again we hope that this should not happen and market is considered to have made bottom on Friday. One should also read our article which we posted in Year 2008 during last recession, where EquityPandit has predicted market bottom precisely.

Check: Indian Stock Market, a copy of its own History !

Now let’s look at some Fundamental checks based on which market would move forward.

– At present market is feared that world economy may see recession due to Corona virus. US has declared Emergency on Saturday, Entire Europe is already Shut while in India almost 15 states has declared it as pandemic and shut down schools, Theaters and other public places.

– At the same time, China situation is becoming Normal and looks like Corona effect in China is now under control. To fight against recession possibilities all central banks across the globe have poured billions of dollars into the system so that it doesn’t turn into financial crisis. Indian Government is also doing everything possible to defeat Corona virus and RBI have also ensured to take prompt actions to provide liquidity. So overall, Governments across the world are in action and taking all necessary steps to avoid financial crisis.

– As of now, market would see consolidation and we would see cyclic movement of rally and correction every alternate day until it breaks from the range.

– First resistance for Nifty would be at 10028 and then 10670, 10950 and 11602. Market would take many weeks and possibly months to breach these resistance levels. Main trigger for market is Corona virus. If Corona treatment is been found in upcoming months then market would surely rally to make new highs as market already have good amount of liquidity in the system and with Corona fear becoming a matter of past, that liquidity would chase equity markets at any available price. So the only hope for the market is Corona virus treatment else it would take many months for market to recover.

Now what if Corona effect worsens across the world and especially in India?

Under that condition market would break Friday’s lows of 8553 and market would start to pricing in Recession fear. Under those conditions market would see a downfall of another 20-30%.

Conclusion:

1. Investors who read our previous article must have invested at levels of 8900 for Nifty and now 8500 is stop loss for them.

2.For traders, as we mentioned in our last article, volatility would be at its peak in the march month, so trade with proper stoploss.

3.Short term Investors, who have bought at our suggested levels of 8900 for Nifty, should book profits on every resistance level as mentioned and should re-enter at lower level, as we firmly believe that market would now enter into a consolidation zone.

4.Investors who have invested at higher level of 11000-12000 should also start averaging bluechip stocks, as and when market corrects, with stoploss of 8500 level for Nifty.