Markets Erratic & In A Narrow Range

Both the key indices were quite erratic in trade today. But then, this was expected considering tomorrow is the expiry of the current series. A narrow trading range suggests that we prepare for a decisive move tomorrow or in a few days. The chances of the indices breaking down are far more realistic and probabilistic considering broader macro indicators and investor sentiment as compared to a pullback or a reversal.

Market Action

The Nifty opened almost flat with an approximate ten-point bias on the downside at 8274.80. It made an intraday high of 8308.20 before reversing and touched an intraday low of 8219.20. It did manage to recover some of its losses and closed at 8237.05 down by 48.55 points or 0.58%. The 8200 put and the 8400 call continued to see the highest open interest build up in trade today. The advance decline ratio stood in favor of the bulls with 777 stocks advancing and 573 stocks declining towards the end of the trade.

The Bank Nifty failed to show the same spirits as yesterday. It opened at 18255.80, barely ten points up, however, managed to touch an intraday high of 18431.90 before losing steam. It made an intraday low of 18202.40 however recovered around 100 points to close at 18302.65. Up by 0.31% or 56.40 points. The 18000 put and the 18500 call continued to see the highest open interest build up today.

India VIX closed at 17.24, a loss of 0.17 points or 0.97%.

Market Outlook

Technical Analysis – Nifty & Bank Nifty

Bearish Setup - Nifty

Bearish Setup – Nifty

The Ichimoku Heikin Ashi chart of the Nifty does indicate a pullback. Will the pullback get sold into or are we looking at early signs of a reversal? At this point, it is difficult to answer that question as the Chart setup continues to look bearish in the short term.

Bearish Setup - Nifty

Bearish Setup – Nifty

Having said that, if one looks at the Nifty chart with a different Ichimoku Time Settings than the standard 9-26-52-52, we can see that the Chikou Span is finding support at the Kumo top.

The Nifty has to break out of this trading range that it is indulging in to draw a conclusive inference. The next 2 – 3 trading days should give us a clearer direction that will help us determine the mood of the market.

The Bank Nifty follows suit and does not give us any clear direction of trade. Our open call on Bank Nifty expires tomorrow, and it will be ideal to close the trade. The Bank Nifty should also give us a fair indication of the direction it wishes to pursue in the next few days.

Let’s hope that the month of May will bring us some cheer 🙂


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