Nifty & Bank Nifty Make a Distribution Pattern

Both the key indices are making a distribution pattern on the charts suggesting that we will see much lower lows than what we have so far. Tomorrow will be a critical day for the Nifty as well as the Bank Nifty, and we might see some surprise and definitive moves.

Market Action

The Nifty opened positive in trade today at 8400.40 and touched an intraday high of 8504.95 before reversing and touching an intraday low of 8361.85. It recovered marginally to close at 8398.30, down by 0.37% or 31.40 points. The 8300 put and the 8500 call saw the highest open interest build up in trade today. Market breadth saw many whipsaws and towards closing we had 635 stocks advancing and 732 declining.

The Bank Nifty opened at 18350.30 more than 100 points up from yesterday’s close. The rally continued till the Bank Nifty touched a high of 18433.80 only to fail and reverse. It made a low at 18143.80 and recovered somewhat to close flat at 18245.60. Down by 1.90 points or 0.02%. The 18000 put and the 18500 call saw the highest open interest build up.

FIIs were net sellers of 276.83 crores while the DIIs were net buyers of 559.6 crores in the cash markets today.

Market Outlook

Technical Analysis – Nifty & Bank Nifty

As mentioned earlier, the Nifty Ichimoku Heikin Ashi Chart does indicate a possible change in the direction of the trend. Extreme volatility is also depicted by the Heikin Ashi Candlestick formation.

A possible pullback tomorrow

A possible pullback tomorrow

Having said that, the change of trend might be a minor pullback however the main direction of the trend does not change. It remains bearish, and this pullback will be sold into. Based on the chart setup tomorrow, I might come out with a fresh call on the Nifty for the coming week. Volatility remains a challenge and will only increase as the expiration comes nearer.

A pullback on the cards

A pullback on the cards

The Bank Nifty’s story is similar to that of the Nifty. A possible pullback is seen however it will get sold into. The flat Kijun Sen indicates some consolidation at this level before the Bank Nifty takes a further plunge.

Tomorrow happen’s to be a 61.8% retracement period of the recent fall for the Nifty and the Bank Nifty. These critical Fibonacci levels are important and generally witness some surprise and / or definitive moves. All indicators for both the Nifty and the Bank Nifty point to a bearish road ahead and tomorrow’s price action will pave the way for the current series. I expect a session with extreme volatility and recommend refrain from taking any positions unless you are sure of what you are doing.

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