Indices Reclaim Crucial Levels, but for how Long can Reliance & HDFC Bank Save

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Indices Reclaim Crucial Levels, But For How Long Can Reliance & HDFC Bank Keep Saving The Day? [8-6-22]

NIFTY O / H / L / C

16263.85/ 16492.80/ 16243.85/ 16478.10 [+121.85/+0.74%]

BANK NIFTY O / H / L / C

34802.25/ 35149.10/ 34659.10/ 35085.45 [+139.30/+0.40%]

India Vix 19.14/-3.53%

FII DII Data Not yet available

SGX Nifty @ 1750h Flat

TOP 5 CONTRIBUTORS OF NIFTY

Lifters 97

Draggers 28

Net +69

TOP 3 CONTRIBUTORS OF BANK NIFTY

Lifters 175

Draggers 75

Net +100

CHART BASED DETAILS & ANALYSIS IS GIVEN IN THIS VIDEO:
https://youtu.be/5TLlm8vow-U

POSITIVES

Nifty ended the day above 16450.

Bank Nifty ended the day above 35000.

Reliance (NS: RELI ) was the star performer and was ably supported by Infosys (NS: INFY ) and HDFC Bank (NS: HDBK ).

India Vix has significantly declined and is now just above 19.

NEGATIVE

Only a handful of stocks have been contributing to the positive/negative moves.

There are quite a few hurdles up ahead as the indices have easily given up the higher levels on various occasions in the last.

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. Nifty opened a few points below the low of 8-6 and then fell further breaking 10250 as well on account of the weak global cues aided by selling in the IT twins. Bank Nifty also started with a gap-down and experienced selling immediately thereafter.
  2. Whereas Nifty was able to bounce off immediately from the lower levels and made a gradual climb despite being sold in at the open, Bank Nifty could not muster enough support to bounce back up immediately.
  3. Almost 75 minutes into the open, Bank Nifty fell close to 300 points from the close of 8-6, and then it bounced back and came into the earlier support and now a resistance area of 34840-860. It tried too hard to clear the lines but it was unable to do so and then went sideways for quite some time.
  4. Nifty was able to keep making higher highs and higher lows thanks to the bullishness seen in Reliance which was the leader today and it was also well supported by the IT twins that turned the corner.
  5. One of the most significant things that happened today, especially on a weekly expiry day is that India Vix Open, High, and the close for 8-6 was the same at 19.84. And once the session progressed, it kept declining in a gradual manner. This indicates that the downside from here may be limited and the probability of the indices making wild moves may be on the lower side for now.
  6. When I completed writing the above points Nifty was around 16360, just above the close of 8-6. As if it read the earlier point, Nifty then went on to retest the 16400+ area but was sent back down below 16350 levels.
  7. However, it found good buying interest from around that area and it then never looked back and was well on its way to hit 16500 in a sustained move leading to the weekly expiry over the course of the next 2.5 hours.
  8. Nifty finally managed to end just above the opening price of 8-6. So from a recovery point of view, a good 235+ points recovery was made but we are back to where we were at the open on 8-6. Bank Nifty ended comfortably above 35000 which is a good sign.
  9. If Reliance, Infosys, and HDFC Bank had even gone flat, leaving aside negative, I cannot imagine what would have been the state of the indices by EOD. For how long can the indices be dependent on just a handful of stocks? I have discussed this point earlier as well.
  10. I am not in favor of having heavyweights that carry more than 10% influence on any index as only then can we have a more balanced running of the indices.
  11. I am also not sure for how long would the indices remain above 16400 & 35000 levels as there have been many easy breaches in the past. So a close on Nifty above 16800 and for Bank Nifty a close above 36000 would only help us consider a scenario, where a reversal may have been made for the short-term.

Note: Posted purely for informational & educational purposes only.

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  • Bipin Kochar @Bipin Kochar
    With the latest repo hike, the 10 year gsec interest rate has shot up to 7.5% vs CPI inflation of 7.8% - hence real interest rates have now on verge of turning positive due to the aggressiveness stance taken by RBI.
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    • Umesh Rindani @Umesh Rindani
      Thank you for sharing your thoughts
      Like 0
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  • Umesh Rindani @Umesh Rindani
    This post is for 9-6-22
    Like 0

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