SGX Nifty Cracks ‘300 Pts’ From High; Bearish Divergence Kicks In!

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Aayush Khanna/Investing.com - Investing.com

There was quite a bullish sentiment prevailing in the Indian markets for quite some time. The primary reason was the bounce back in the US markets. Yesterday, India’s CPI data was released which recorded a spike in inflation from 6.71% in July 2022 to 7% in August 2022, while today (a few minutes ago) US CPI for August 2022 came in at 8.3% on a YoY basis which surprised the markets. Although it is a downtick from 8.5% in July 2022, still investors were seen liquidating their equity holdings in the blink of an eye.

The result led to a very sharp fall in the Dow Jones futures which fell from the day’s high of 32,631.5 to the CMP of 31,940, depicting a cut of 2.11% from the highs. The same intense selling pressure was witnessed in the broader market S&P 500 index and the tech-heavy Nasdaq 100 . The selling spree spread to other asset classes as well with gold and silver both seeing a heavy cut of around 1.47% and 1.9%, respectively. 

Image Description: 5-minute chart of the SGX Nifty

Image Source: Investing.com

A sudden hit to the global market sentiments has also been reflected via a sharp cut in the SGX Nifty , which plunged from the day’s high of 18,142.5 to a low of 17,825.5, translating into a fall of around 1.74% or 317 points from the high. In my yesterday’s article, I mentioned that there was a clear double top in the making in the Nifty 50 index which is a reversal sign and therefore bulls should have been cautious. 

However, as today, the market crossed the much-awaited 18,000 mark in style, and all long positions got covered, leaving bulls with hefty profits. However, this break of resistance has also led to the formation of a bearish divergence which was already present in the Bank Nifty since it crossed its August 2022 high.

This was the reason, I was not so bullish even after a cross above the 18,000 level. Now as the SGX Nifty is down around 300 points from the high, there is sure to be a gap down opening tomorrow which might shake the confidence of bulls. In my opinion, this dip should not be taken as a buying opportunity. The first signal of selling mentioned in yesterday's update was the break below the previous day’s low. With tomorrow’s gap down opening, this might be happening at the opening tick.

Now, as the weekly expiry is close, expect the market to remain volatile till Thursday. There is a high OI of around 1.45 lacs, 1.26 lacs and 1.01 lacs present at 18,000 PE, 17,900 PE and 17,800 PE, respectively, all of which would become ITM at the opening tick (17800 PE has a lesser chance). The put unwinding might further lead to a continued down move in tomorrow’s session. In short, the selling bears were waiting for is finally here.

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  • Mustaque Alam @Mustaque Alam
    ur analysis went haywire horribly wrong.. surprised?
    Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Not much surprised after looking at today's correction :)
      Like 1

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  • K shah @K shah
    Horribly wrong. market has been one way today and entire gap is filled.
    Like 2
  • Rajendra Halliyavar @Rajendra Halliyavar
    Nothing to worry. Opportunity to long term investors. Accumulate good stocks. Cheers.
    Like 0
  • Manish Jain @Manish Jain
    Tremendous Analysis sir... Thanks a lot for the clear words
    Like 4
  • Manish Jain @Manish Jain
    Tremendous Analysis sir... Thanks a lot for the clear words
    Like 0
  • JITENDER KAUL @JITENDER KAUL
    Appreciate the excellent analysis which is put across in a simple manner.
    Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Thanks Jitender.
      Like 0

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  • Md Ejaz Khalid @Md Ejaz Khalid
    Thanks for the best analysis always.. The best way you are showing road map of the market.. As per your previous post took the PE today and will be benefitted tomorrow..Thanks again.
    Like 0
  • Praveen Kumar @Praveen Kumar
    crepto k bare m batate rahna
    Like 0
  • Manjit Polist @Manjit Polist
    thanks a lot sir (महोदय बहुत बहुत धन्यवाद)
    Like 0
  • Manjit Polist @Manjit Polist
    thanks a lot sir (महोदय बहुत बहुत धन्यवाद)
    Like 0
  • Ria Singh @Ria Singh
    thanks 👍
    Like 0
  • udayan mashruwala @udayan mashruwala
    thanks a lot
    Like 1
  • Indianathan N @Indianathan N
    yeah, thanks
    Like 0
  • Indianathan N @Indianathan N
    yeah, thanks
    Like 0
  • Vk Pandey @Vk Pandey
    Jhakas Analysis today rally was not supportive with buying at all
    Like 1
  • Vk Pandey @Vk Pandey
    Jhakas Analysis today rally was not supportive with buying at all
    Like 0
  • Vk Pandey @Vk Pandey
    Jhakas Analysis today rally was not supportive with buying at all
    Like 1
  • Vijay Dhondge @Vijay Dhondge
    Superb analysis sirji 👍👌
    Like 4
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Thanks Vijay.
      Like 2

      • Comment Guidelines

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  • Pritesh Poojari @Pritesh Poojari
    You mean In the money Put Writers?
    Like 0
  • Pritesh Poojari @Pritesh Poojari
    You mean In the money Put Writers?
    Like 0
  • Pritesh Poojari @Pritesh Poojari
    You mean ITM Put Sellers??
    Like 0
  • Pritesh Poojari @Pritesh Poojari
    You mean ITM Put Sellers??
    Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Yes Pritesh, I mean unwinding from ITM put writers.
      Like 0
    • Tawalpreet Singh @Tawalpreet Singh
      write it somewhere, expiry will be 18150;, market will cover first tomorrow, its new buying opportunity..
      Like 1

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  • Sivagnanam Subramanian @Sivagnanam Subramanian
    Good analysis. "In my onion, this dip should" - Kindly correct the typo onion, it's opinion..
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Thanks Sivagnanam :)
      Like 0

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  • Sivagnanam Subramanian @Sivagnanam Subramanian
    Good analysis. "In my onion, this dip should" - Kindly correct the typo onion, it's opinion..
    Like 0
  • Vijaya Kumar @Vijaya Kumar
    what about Tomm Indian market??
    Like 0

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