NIFTY 50 is trading at its lowest level in more than 2 years as Indian stocks sustain losses on coronavirus fears. As of this writing, the index is in the red by over 8.20%. It is trading at its July 3, 2017 lows at 9,593.00.
Just like the other equities markets, the NIFTY 50 was hit hard by the declaration of WHO classifying the coronavirus as a pandemic. This means that the coronavirus has spread on a global scale. It is more serious than an epidemic which is concentrated in one region or area of the world. With this new designation, the international health organization hopes that governments will step up their efforts in containing the disease.
US President Trump has already announced fiscal measures in a press conference today. Unfortunately, he was unable to ease market concerns. Meanwhile, in India, the government has suspended tourist visas and quarantined travellers in an effort to contain the coronavirus. The number of cases has doubled to 73 today.
Read our Best Trading Ideas for 2020.
NIFTY 50 Outlook
On the monthly chart, we can see that the aggressive sell-off on NIFTY 50 has been enough to break trend line resistance at 11,000.00. The good news is that it may soon encounter a confluence of support around 9,020.08. This price coincides with the index’s previous highs on March 2015 and August 2016. It also aligns with the 100 SMA. Lastly, when you draw the Fibonacci retracement tool from the low of February 2016 to the high of January 2020, we can see that it coincides with the 61.8% Fib level. Reversal candles around this area could indicate a rise in NIFTY 50 soon to its previous lows at 10,358.00.
On the other hand, a break below this support level could mean that a bigger sell-off is ahead. If this happens, the next support level could be at 8,150.00 where NIFTY 50 bottomed on December 2016.
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