Nifty 50 Cracks 350 Pts, ‘Finally’ Breaks 17,800! What’s Happening?

  • Stock Market Analysis
Aayush Khanna/Investing.com - Investing.com

The eye-popping allegations by Hindenburg on Adani Group have created widespread panic in the Indian markets. The group has been alleged to have committed the biggest financial scam in corporate history and Hindenburg is backing it all up with its 106-page-long extensively-researched report. 

The bigger problem that’s surfacing is, what would happen if it actually turns out to be a scam and the group collapses. This would create a spillover effect on the entire banking system of the country, and therefore the banking space is cracking hard.  

The Nifty Bank index is down over 2,100 points in two sessions alone (including today), as investors are fleeing from PSU banks. The share price of SBI (NS: SBI ) fell from INR 604 to INR 533 in three sessions, while PNB (NS: PNBK ) is 10.7% down this week so far. In fact, the Nifty PSU Bank index tanked over 10% this week as investors are concerned over these banks’ exposure to the Adani Group. 

Image Description: Daily chart of Nifty 50 (spot) 

Image Source: Investing.com

Now, coming to the gloomy picture, the Nifty 50 index has finally broken below the major support level of 17,800, which was keeping the market from falling till now. As indicated in my previous few analyses, this was ‘the level’ to watch out for in case the Nifty 50 is to resume its downtrend. Although, the market is still open which means the index could again close above this level, as it has done many times in the recent past, still, I believe this time is different.

The spurt in India VIX which was indicted on Wednesday has continued today. On the last day of the week, India VIX jumped around 18.6% to 17.4 so far, over and above a 7.3% rally on Wednesday. This is a concerning sign and indicates a continued downside.  

The next support for the Nifty 50 is 17,450 which might be reached soon. However, going short around the CMP of 17,540 is a bit difficult as the index has been falling for the third-straight session but the trend is extremely bearish right now, therefore traders might not get an opportunity for a 200 - 300 points bounce back. 

It is not a calm market environment as the panic-selling on account of the entire Adani Group fiasco is quite intense. And with VIX rising to the highest level since mid-October 2022, the moves could be sharp which calls for robust risk management and appropriate position sizing.

The trend is strongly negative, and as the index is headed to 17,450 and all counter-trend rallies from here are a selling opportunity. We would again look into this structural downtrend once the market takes a breather at this next support.

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  • Tanuj Agarwal @Tanuj Agarwal
    I have around 100 shares of Adani Enterprises and 50 shares of Adani Ports and Ambuja Cement, and in a combined loss of more than 1 lakh. Dont you think Gautam Adani being the biggest beneficiary of Modi's run since 2014, will overcome this just like the past allegation and will resume its rally?
    Like 6
    • Aditya Malhotra @Aditya Malhotra
      This is the 4th allegation on him in 18 months... This is backed by research and not just basic analysis... Sebi ed dri will have to investigate all of this in public interest now... But don't we all know how this guy actually plays with the government...
      Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      That's shouldn't be your concern. What should matter to you is what if the dream run is over and if so, how would you cap your losses. Focus on what you can control.
      Like 5
    • Pradeep Namballa @Pradeep Namballa
      any bounce you should exit as Modi govt can fall if this allegations come true....
      Like 0

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  • Bankim Vyas @Bankim Vyas
    jump at mid of june
    Like 0
  • kadar supermarket @kadar supermarket
    hi Aayush ...I was sitting on cash during this entire rally as I got burnt bad in 2022 but now since markets are falling when is the right time to jump in plz let me know :-)
    Like 6
    • Bankim Vyas @Bankim Vyas
      jump at mid of june
      Like 0
    • Sridhar N Rao @Sridhar N Rao
      Am No expert but I an waiting for Nifty to crack Below 17000 before I put my money in the market. As of now, I have only 30% exposure. 70% in debt and gold.
      Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      The only right time is when your strategy/system signals a trade :)
      Like 1

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  • Deepak Kumar Ihm Lucknow @Deepak Kumar Ihm Lucknow
    thanks
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      You're welcome, Deepak.
      Like 0

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  • Ganapathy Raman @Ganapathy Raman
    Exactly Ayush ji !!! Stoplosses are the God now
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      It has always been :)
      Like 0

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  • Vivek Purav @Vivek Purav
    Hi . What to do with RECl and PFC which has exposure in adani power.
    Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Hi Vivek, I am holding both the stocks in my portfolio so my view could be biased but they are excellent dividend stocks.
      Like 1
    • Vivek Purav @Vivek Purav
      ok thanks
      Like 0

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  • namami ghosh @namami ghosh
    thanks for this
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      You're welcome :)
      Like 0

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