Indices on the Verge of Breakdown - will Rate Revision News Rescue/Sink them?

  • Stock Market Analysis
  • Editors Pick

NIFTY O / H / L / C

16469.30/ 16487.25/ 16347.10/ 16416.35 [-153.20/-0.92%]

BANK NIFTY O / H / L / C

35080.80/ 35154.30/ 34834.0/ 34996.00 [-314.20/-0.89%]

India Vix 20.43/+1.14%

FII DII Data -983 Crores

SGX Nifty @ 1830h -40

TOP 5 CONTRIBUTORS OF NIFTY

Lifters 12

Draggers 72

Net -60

TOP 3 CONTRIBUTORS OF BANK NIFTY

Lifters 06

Draggers 274

Net -268

CHART BASED DETAILS & ANALYSIS IS GIVEN IN THIS VIDEO:
https://youtu.be/Af0GREvyQCI

POSITIVES

Reliance (NS: RELI ) ended in the green.

Nifty ended the day above 16400.

NEGATIVE

Bank Nifty ended the day below 35000.

Except for Reliance, all index heavyweights ended in the red.

India Vix rose by 1%+.

The FII net selling keeps outnumbering the DII buying.

SUPPORTS & RESISTANCE LEVELS

Nifty – Support 16200-16300 Resistance 16500-600-16650

Bank Nifty - Support 34800-35000 Resistance 35400-600-800-36000

TRADING INSIGHTS & OBSERVATIONS

  1. Amidst mixed Asian markets and negative US Futures, Nifty opened gap-down by 100 points and Bank Nifty by 200+ points. Even without the global cues, we would have sold into the opening as the FIIs had sold in excess of 2,000 Crores yesterday.
  2. When the global markets were performing very well yesterday, our markets were undecided about the course of action in view of the upcoming RBI policy announcement on 8-6, even though nothing unexpected is likely to be announced.
  3. Our markets chose the way to be sold in anticipation of the known “unknown”, and today, the market makers followed the global cues as it suited their goals of hitting the sell button. I am not sure if LIC is out of action as for quite some time, the DIIs have not been able to demonstrate a solid buying week which could take the market out of the woods.
  4. The way it is moving, to me, it appears that even the DIIs have been selling into the rise, but before the day ends, they end up buying to balance the equation.
  5. And today, Bank Nifty broke 35000 and Nifty 16400 as they went down further in the morning session itself. Would they be able to hold on to these levels till the EOD is what needs to be seen? Bank Nifty made a low of 34912 and Nifty made a low of 16351.
  6. India Vix was up more than 3% and for a while was trading above 21 as the indices are hovering around the key levels that had been respected so far.
  7. Once Nifty had breached 16400, it found buying support and in an hour or so, it went up by 40+ points and met with the resistance area of 16438-450 which is the zone from where it had taken support earlier. This is what I was fearing yesterday itself.
  8. It then started to fall and in an hour or so, was down by 90+ points and even broke 16350. It then struggled for the rest of the day to fight a fierce battle to trade above 16400 and despite hard resistance around 16420-30, it managed to end the day at 16416.
  9. Between 1200-1400h, Bank Nifty fell 200 points and Bank Nifty made a new low at 34834 before bouncing back up and ending the day just below 35000.
  10. It was Reliance that ended in the green even if an insignificant green, and that is what helped Nifty stay above 16400 as the rest of the heavyweights were under pressure throughout the day in a market-wide bearishness prevailing ahead of the RBI policy announcement tomorrow.
  11. My view on the rate hike - we have already been underperforming and have already built-in all the negatives that one could think of from a rate hike point of view. So the rate hike may not be an issue, but the CRR may hold the key and how the explanatory statements are made by the RBI.
  12. The indices would react to those and if they break the lows made today, we may be heading towards 15700-15900 levels in the days to come. And if the indices react positively, a close above 16600 on Nifty and above 36000 on Bank Nifty would do a lot of good to the market sentiment.

Note: Posted purely for informational & educational purposes only.

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  • eeshwar naidu @eeshwar naidu
    Good assessment as usual.
    Like 0
    • Umesh Rindani @Umesh Rindani
      Thank you for the kind words.
      Like 1
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  • Asha Sasi @Asha Sasi
    Nice😀
    Like 0
    • Umesh Rindani @Umesh Rindani
      Thank you
      Like 0
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  • Maya Maya @Maya Maya
    thank you
    Like 1
    • Umesh Rindani @Umesh Rindani
      You are welcome
      Like 0
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