Medium Term Trend: ↑UP (down below 11550)
Day of weakness: Nifty opened flat and kept trading south inspite of Dow putting up 700+ points and in last 2 days and RBI cutting interest rates which was in line with market expectations. Nifty closed at 11845 levels down 175 points.
We had mentioned in previous post that Nifty's inability to close above 12040 is a bit of downer for bulls and if 12K levels breaks then we can test 11850-900 levels again. Nifty today opened flat and broke below 12K in first 30 minutes itself. Failure to move above 12K levels inspite of RBI cutting interest rates invited more weakness and selling and squaring off of longs pushed Nifty all the way back to 11850 levels today itself.
Now that Nifty has touched 11840-50 levels, its important to observe if attempts to take support at 11780-11820 levels as breach of these levels could invite further weakness in near term. Key point to note about todays fall is that it was very measured, was steady and consistent ( & not a panic selling). Usually when there is a panic selling there is always a chance of a sharp bounce back but when the selling is measured and controlled the chances of market giving further weakness increases.
We had also mentioned that divergence between DOW & Nifty has increased in last few days and while Dow is 5-6% down from its all time high, Nifty is trading above it and as we move forward both indices should catch up (either Dow should move up or Nifty moves down). In last 2 days Dow moved 3% up while Nifty has moved 2% down so a gap of ~5% is filled already between them. Going forward too we need to keep an eye on how both indices are progressing.
In summary, we need to see if market takes support near 11800 levels (especially near last Fridays low). If it does so then strong chances of reclaiming 12K levels again is there however it it doesn't hold then like we mentioned above, the chances are that this dowemove or weakness might persists for few more days. However keep in mind that market trend remains up (as long as 11500 holds) and any fall from here could be an excellent buying opportunity (but dont try to catch a falling knife, let mkt stabilise first, give signs that correction is over and then only go long) .
Happy Trading!
Day of weakness: Nifty opened flat and kept trading south inspite of Dow putting up 700+ points and in last 2 days and RBI cutting interest rates which was in line with market expectations. Nifty closed at 11845 levels down 175 points.
We had mentioned in previous post that Nifty's inability to close above 12040 is a bit of downer for bulls and if 12K levels breaks then we can test 11850-900 levels again. Nifty today opened flat and broke below 12K in first 30 minutes itself. Failure to move above 12K levels inspite of RBI cutting interest rates invited more weakness and selling and squaring off of longs pushed Nifty all the way back to 11850 levels today itself.
Now that Nifty has touched 11840-50 levels, its important to observe if attempts to take support at 11780-11820 levels as breach of these levels could invite further weakness in near term. Key point to note about todays fall is that it was very measured, was steady and consistent ( & not a panic selling). Usually when there is a panic selling there is always a chance of a sharp bounce back but when the selling is measured and controlled the chances of market giving further weakness increases.
We had also mentioned that divergence between DOW & Nifty has increased in last few days and while Dow is 5-6% down from its all time high, Nifty is trading above it and as we move forward both indices should catch up (either Dow should move up or Nifty moves down). In last 2 days Dow moved 3% up while Nifty has moved 2% down so a gap of ~5% is filled already between them. Going forward too we need to keep an eye on how both indices are progressing.
In summary, we need to see if market takes support near 11800 levels (especially near last Fridays low). If it does so then strong chances of reclaiming 12K levels again is there however it it doesn't hold then like we mentioned above, the chances are that this dowemove or weakness might persists for few more days. However keep in mind that market trend remains up (as long as 11500 holds) and any fall from here could be an excellent buying opportunity (but dont try to catch a falling knife, let mkt stabilise first, give signs that correction is over and then only go long) .
Happy Trading!
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