Not Much Downside From Here But Strong Pullback Also Unlikely, Says CK Narayan

The recent market decline should not be cause for concern as it is the sentimental impact of the collapse of Silicon Valley Bank in the United States, according to technical analyst CK Narayan.

"The decline in markets is one that has happened due to fear over substance. Bank failures can induce fear and panic, the result of which is visible in the U.S. banking sector," the founder of Growth Avenues, Chartadvise, and NeoTrader told BQ Prime.

However, Narayan does not see the SVB collapse having a major impact on Indian markets. "It is mainly a sentimental impact that we are seeing on Indian markets," he said. "This fear-based decline is characterised by sharpness and speed, which is what we are witnessing."

"Advise not to worry about the kind of fall the market has witnessed," Narayan said.

India's benchmark stock indices have fallen over 3% since the collapse of SVB. At 2:53 p.m., the benchmark NSE Nifty 50 declined 0.69% to 17,034.75.

Strong Pullback Rally Unlikely

"On Nifty, the 17,000 puts have a substantially large position, where bulls will make a defensive line," Narayan said. "As such, do not see too much downside in markets from hereon." 

The market is lacking in volumes and participation, so volatility is high, he said. However, the weak and brittle market sentiment will not support a strong pullback rally, he said. As such, he advises traders to get in and get out quickly with small gains.

Bank Nifty To Remain Near Support

Given that Bank Nifty rules the sentiment among the traders, Narayan does not expect selling or shorting in banking stocks. "We will remain closer to support levels," he said, adding that Bank Nifty is getting into a range with 39,000 on the downside and 42,000-42,500 level on the upside.