“The updates on the spread of coronavirus
cases would be the only biggest trigger for the next few trading sessions. Also, the resolution plan for YES Bank
could be an important trigger on the domestic front. The short-term trend is weak, and 10,900 should act as an important support for the market. Trading above the same, we can expect a quick relief rally up to 11,200-11,250. However, a fall below 10,900 could trigger one more leg of correction wave till 10,800-10,750,” says Shrikant Chouhan, senior vice-president, equity technical research, Kotak Securities.
On Friday, the Nifty dropped to 10,827 in intra-day trade and saw a sharp pullback from that level to close slightly below 11,000.
Analysts at ICICI Direct believe the markets
could form a base at current levels. “The markets
are entering a truncated week and may witness some short closure if the Nifty holds above 11,000. However, till clouds over coronavirus
remain, the major short-covering trend is unlikely to pan out,” says the brokerage.
Experts say traders have built huge short positions in the market. As a result, positive development often leads to short-covering, which takes the indices higher. However, given the overarching weak sentiment, the recovery is short-lived. After a bad start in 2011, the Nifty ended the year with a 25 per cent decline. Investors will be hoping that 2020 may have begun on a weak note, but ends well.