Short covering led 20th March rally, tread cautiously
Published On: Saturday, March 21, 2020 | By: Team KnowMyStock
Despite a rise in the number of cases of coronavirus and shutdown enforced in many cities, Indian equity induces paused their losing streak and bounced on 20th March(Friday), surprising many. Nifty has fallen nearly 35 percent from its record high in January. On 20th March, the market bounced on smart gains in energy, pharma, and FMCG stocks. A rally in global markets also helped improve sentiments in India. Analysts tracking the market said Friday’s rally was largely led by short- covering, and buying might emerge despite negative sentiments, depending on how global investors chart their path. However, they cautioned investors not to read too much into it.
Friday's bounce was a short covering-led rally only as the market was falling continuously. The overall trend remains negative but the way Nifty bottomed out near 7,800 on 19th March and now making higher tops and higher bottoms, it may see some recovery towards the 9,200 mark,” expert opinied.
"The market saw some low-level buying on 20th March, but one should not be too hopeful.There are buyers for blue chips as they have fallen too much,” Some analysts said.
“But do not read too much into Fridays’s jump. Anything can happen, as it is an evolving situation. There could be a weakness in the market on Monday, when it opens after a two-day gap.As long as there is no light at the end of the tunnel, we are likely to see continued volatility, which means more up days and down days,””experts opniened.
Tags: Short covering
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