Medium Term Trend: ↑UP (down below 11650)
Sharp Sell Off: Nifty opened in +ve territory today however failed to sustain above 11975 levels and dropped below 11900 levels, it tried to sustain around 11850-75 levels but the late bout of selling pushed it further down to 11800. It closed with a big loss of 135 points.
Today was the budget day so volatility was expected, however the intensity and range of the fall is surprising. We were expecting some resistance in 11940-975 zone but were also expecting markets to breach it but clearly markets were not ready (yet). There was nothing in the budget which could have spooked the market but it seems it was due to unwinding of speculative positions which were made ahead of the budget (expecting some positive surprise). anyways markets go where they want to go irrespective of budgets and events.
After seeing such a big sell off knives are already out and many analysts on TV and websites have started terming this as a start of new downtrend. This could be true however judging markets on the basis of just one day fall would be premature as per our thinking, Even though Nifty fell with a bang there were few +ve things. Firstly there was a big divergence between Nifty and Bank Nifty. While Nifty fell 130 points, Bank Nifty closed flat, secondly some +ve divergence was witnessed on the hourly charts and even though Nifty has fallen sharply, the weekly close is still in positive and Nifty has protected the low of previous low. And lastly though most momentum indicators have turned negative on hourly charts, they continue to be +ve on daily charts. In the chart above it can be seen that Nifty has closed at a very crucial support zone. If one joins the recent lows of 11100 and 11650 then support line is pointing to 11800 ( which for now is not broken).
Also, if one look at the daily charts, this rally started from 11650 levels and took 12 trading sessions to reach 11983. Now in last 12 days there were 9 days where markets posted a new high above previous day high & just 5 days where the low of previous day was breached. Now of course if markets are going to down, then this doesn't matter but the last 8-10 days were more in favour of bulls than bears.
Now to talk about negatives, firstly the biggest negative is that Markets have failed to take out 12K levels yet again & secondly markets have posted a shooting star on weekly charts and lastly even though markets have protected the lows of 11600, the follow up buying seems to have lacked momentum till now.
All in all markets continue to remain choppy (todays choppiness was probably due to the big event) and even though they have taken a big hit today, further weakness is likely only when Nifty start trading below 11800 and goes on to break 11760. If 11760-750 fails to hold then markets can quickly drop to 11650 levels. Market support zone now stand at 11650 ( from previous level of 11550) and break of 11650 could put markets in a free fall. If markets start trading below 11750 then the likelihood of markets breaking below 11650 is pretty high however if 11800 sustains and Nifty once again starts showing some strength above 11850 levels then we can see 11975 levels being tested once again.
Happy Trading!!
Sharp Sell Off: Nifty opened in +ve territory today however failed to sustain above 11975 levels and dropped below 11900 levels, it tried to sustain around 11850-75 levels but the late bout of selling pushed it further down to 11800. It closed with a big loss of 135 points.
Today was the budget day so volatility was expected, however the intensity and range of the fall is surprising. We were expecting some resistance in 11940-975 zone but were also expecting markets to breach it but clearly markets were not ready (yet). There was nothing in the budget which could have spooked the market but it seems it was due to unwinding of speculative positions which were made ahead of the budget (expecting some positive surprise). anyways markets go where they want to go irrespective of budgets and events.
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| Nifty Daily Chart |
After seeing such a big sell off knives are already out and many analysts on TV and websites have started terming this as a start of new downtrend. This could be true however judging markets on the basis of just one day fall would be premature as per our thinking, Even though Nifty fell with a bang there were few +ve things. Firstly there was a big divergence between Nifty and Bank Nifty. While Nifty fell 130 points, Bank Nifty closed flat, secondly some +ve divergence was witnessed on the hourly charts and even though Nifty has fallen sharply, the weekly close is still in positive and Nifty has protected the low of previous low. And lastly though most momentum indicators have turned negative on hourly charts, they continue to be +ve on daily charts. In the chart above it can be seen that Nifty has closed at a very crucial support zone. If one joins the recent lows of 11100 and 11650 then support line is pointing to 11800 ( which for now is not broken).
Also, if one look at the daily charts, this rally started from 11650 levels and took 12 trading sessions to reach 11983. Now in last 12 days there were 9 days where markets posted a new high above previous day high & just 5 days where the low of previous day was breached. Now of course if markets are going to down, then this doesn't matter but the last 8-10 days were more in favour of bulls than bears.
Now to talk about negatives, firstly the biggest negative is that Markets have failed to take out 12K levels yet again & secondly markets have posted a shooting star on weekly charts and lastly even though markets have protected the lows of 11600, the follow up buying seems to have lacked momentum till now.
All in all markets continue to remain choppy (todays choppiness was probably due to the big event) and even though they have taken a big hit today, further weakness is likely only when Nifty start trading below 11800 and goes on to break 11760. If 11760-750 fails to hold then markets can quickly drop to 11650 levels. Market support zone now stand at 11650 ( from previous level of 11550) and break of 11650 could put markets in a free fall. If markets start trading below 11750 then the likelihood of markets breaking below 11650 is pretty high however if 11800 sustains and Nifty once again starts showing some strength above 11850 levels then we can see 11975 levels being tested once again.
Happy Trading!!