Evasive Maneuvers by the Benchmark Indices

Evasive maneuvers by the benchmark indices. While a pullback was evident on the charts, the indices surprised us today by tanking further. Yesterday, I mentioned about the Fibonacci time extension levels indicating that the markets might have a surprise in store for us today, and boy, are we surprised! So do we see a pullback in the immediate future or do we continue tanking? Read on to find the answer.

Market Action

The Nifty opened flat at 8405.70 in early trade today and took a dive to touch an intraday low of 8273.35. The Nifty clocked a high at 8413.30 barely 8 points above the open. The Nifty did manage to recover some of its losses in the last half an hour to close at 8305.25. A loss of 93.05 points or 1.1%. The 8300 put and the 8500 call was the most active in the current series and saw the highest open interest build-up. Market breadth was negative throughout the day and at closing time, there were 1204 stocks declining and only 177 stocks advancing. The volatility index is on the rise, and the India VIX stands at 19.11 for the day.

The Bank Nifty, on the other hand, opened at 18290.80, up by about 45 points and marked the same level as its day’s high as well. From there it went down south to touch an intraday low of 17916.80 and recovered a wee bit too close at 18001.90. A loss of 243.70 points or 1.33%. The 17500 put and the 18500 call saw the highest open interest in trade today.

FIIs continued to be net sellers to the tune of 775.46 crores while the DIIs continued to be net buyers of 896.33 crores in the cash markets.

Market Outlook

Technical Analysis – Nifty & Bank Nifty

The Nifty Heikin Ashi Candlestick formation yesterday as well as haDelta, both indicated that a relief rally was in the making. I expected the rally to be evident and profound today. However, the markets were in a mind of their own. From a Fibonacci point of view, I must accept that the markets did surprise me.

Nifty Surprises

Nifty Surprises

The overall Ichimoku Heikin Ashi chart of the Nifty continues to look bearish and as outlined yesterday, is all set for a much lower low than what we have seen in March. haDelta continues to indicate a pullback, and we might see some recovery in the coming week. Having said that, one must remember that the coming week will be filled with extreme volatility due to the expiry of the current series. The recovery in all probability will get sold into however.

I advise a word of caution to all traders. It is better to live to trade the Nifty another day. I mean in the next series. I do expect the Nifty to go down and touch a level of around 7990 – 8000 before we see a trend reversal. However, let’s look at a fresh trade once the expiry action is behind us.

Bank Nifty Resumes Downtrend

Bank Nifty Resumes Downtrend

The Bank Nifty, once again mimics the story of the Nifty with regards to the pullback. A failed attempt by the bulls. While the direction of the Bank Nifty is down south and we have yet not achieved our targets as per our open call, I suggest that we let this expiry action pass before we add any fresh positions.

Among the two indices, the Bank Nifty is much weaker, and a pullback now is questionable. The charts will tell us much more in time to come.


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