Nifty50 forms Death Cross 1st time since March 2020; 12 more firms log bearish crossover

A Death Cross is formed when a short-term moving average (50-DMA) crosses below a long-term moving average (200-DMA). 50-Days Moving Average is placed at 17,157 while the 200-Days Moving Average is placed at 17,164, data from Trendlyne showed.

The Nifty50 which opened with a gap-down hit a high of 17,237 and a low of 17,067. It closed near the opening level thus making a Doji kind of formation on the daily charts. Crucial support for the index is still placed at 17,000.

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The BSE Bankex also formed a Death Cross on the charts. The index closed 1.6 per cent lower at 42,348 weighed down by losses in

, , , and Kotak Bank, data showed.

Not just Nifty50 but 12 more stocks saw bearish crossover which includes names like HCL Technologies,

, HFCL etc., data from Trendlyne showed.

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What should investors do?

The Nifty50 closed 1.7 per cent lower at 17,173 on Monday, weighed down by losses in , HDFC, as well as Bank.

The last time when the index formed Death Cross was back in March 2020 when indices suffered a double-digit fall due to COVID uncertainty.

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Fall in April 2022 was largely on account of external factors; hence, investors should look at buying quality stocks on dips.

“Markets fell mainly on account of below expectation results from heavyweights and weak global cues due to Russia-Ukraine crisis. However, in the long run we are still bullish considering the support from the government for various industries,” Rahul Sharma, Research Head at Equity 99, said.

“The Indian market has shown signs of correction mainly due to global clues recently, however it has also bounced back positively. In the long-run we are extremely bullish on Indian markets and we don’t feel that the outlook has changed in the long run,” he said.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas said that the formation of a Death Cross on both Sensex & Nifty is definitely a sign of caution; however, it is essential to wait for more evidence before concluding that the market is in for a major fall.

The index breached the 50 DMA & the 200 DMA on an intraday basis today but managed to hold on to them on a closing basis.

“Over there the index has formed a Doji pattern, which shows indecision in the minds of the market participants. Overall structure shows that the short term range for the index has shifted lower. The Nifty is expected to trade in the range of 17000-17500 in the short term,” said Ratnaparkhi.

He further added that on the downside, 17000 is a crucial support to watch out for, and traders having long positions can hold on to their position with a reversal below 17000 on a closing basis & look for a bounce towards 17500.


(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)