logged their biggest-ever single-day recovery after falling as much as 10.8% intraday on Friday. Photo: PTI
"After an initial panic, long build-up was seen on the Nifty," said Chandan Taparia, head of derivatives and technical research at Motilal Oswal Financial Services.
Meanwhile, traders, who had started to build short positions in the market by buying 'put' option contracts, were in for a shock. Put options for the Nifty
with strike price of 9,800 and 9,900 saw their option premiums erode about 40 per cent by the end of Friday's trade.
After the markets opened 5 per cent gap-down, the Nifty
hit the lower circuit of 10 per cent within five minutes. This led to the halting of trade for 45 minutes. After the markets resumed at 10.15 am, the markets turned green within one hour of trade.
Experts say traders
will need now be cautious on building any fresh positions in the market. "Traders will have to avoid carrying over their positions to the next day of trade," said a dealer with a broking house.
"The markets will remain volatile for a while and sharp market swings can significantly erode trading positions," Radke said.
Further, the markets are expected to remain in consolidation mode until the is clarity on the coronavirus
pandemic. "Traders are advised to remain light on positions as volatility is at multi-year highs," Taparia added.
On Friday, the markets logged their largest-ever single-day recovery after falling as much as 10.8 per cent intraday. The Nifty closed 3.8 per cent higher at 9,955.2 points.
Analysts say that it'd still be some time before the Nifty reclaimed the 12,000-levels.
Analysts say the Nifty must continue in above 9,400 zones to bounce back to the 10,333 and 10,650-levels.