Markets activity turned laggard on Tuesday with cash market turnover declining to Rs 65,000 crores ahead of the uncertainty of the U.S. Government shutdown with Sensex sustaining below 50 DMA. The outlook for markets remains cautious after U.S. Indices traded below its major breakdown. For Nifty, crucial support is seen at 19,600 below which, we may see an immediate hit towards 18,800.
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Markets ended unchanged on Monday and formed a doji star on the candlestick thus indicating signs of indecisiveness as it moves closer to important trend line support. The low of Doji star is placed at 19601 and should act as an important trigger for the activation of the next round of selling and any move below 19600 should force Nifty to test 19200 in a quick span of time. Adding to it, a bullish island reversal was also seen in USDINR in yesterday’s session which has the potential to trigger a sharp move towards 87. The overall observation suggests markets are on the verge of a major breakdown which has the potential to trigger 10-15% in the very immediate future.
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Markets tend to remain strong as long they hold comfortably above the previous highs, while below the same - turns the recent breakout void. In Nifty terms, we expect an immediate target of 18,200 on breach of 19,265 in Nifty futures.
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Markets activity remained tilted towards large cap with Sensex moving closer to its all-time peak despite India VIX posting gains. After yesterday’s up move India VIX has moved closer to breakout and a move above 12 should be seen as a major sign of strong Put option accumulation in markets and an initial leg of unwinding may be faced by high beta counters especially midcaps and small caps.
An immediate upside projection of India VIX is seen at 14 on a move above 12. For Sensex, crucial levels to be watched would be 67619 on a closing basis as most of the time major tops are formed in the area of earlier peaks and in Nifty terms reversal to be confirmed on a close below 19830. Markets are unlikely to sustain higher levels if India VIX keeps on a steady rise and would be seen as a major sign of a bull trap.
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Markets cooled from day’s high to end on a flat note after broader markets corrected sharply with Midcap and Smallcap Index declining over 3% and India VIX surging above the 11.5 mark. Brent crude too has crossed USD 92 a bbl mark and should be positioned to test USD 107 a bbl in the coming week after the recent breakout.
The Nifty 500 Index has confirmed major reversal with formation of bearish engulfing pattern on daily candlestick and is likely to active next round of selling in the broader markets. The rise in India VIX should be seen as a lead signal of major decline for Indian markets and a move past 14 may eventually force Nifty below 19,000 levels in a quick span of time.
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Markets inched further higher on Thursday to cross above 19,700 on the back of a sharp surge in Bank Nifty while key concerns like rising USDINR and Brent Crude prices continue. The broader market index namely the Dollex 100 index which is basically the BSE 100 Index in USD terms has formed a bearish pennant where Wave C within Wave 2 is coming to an end and a negative closing of 0.65% or 125 points in Nifty 50 should be sufficient to confirm a major trend reversal. The crucial breakout for USDINR is seen at 83.46, above which we may see a quick short covering towards 88.
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Markets witnessed a euphoric upmove in broader markets especially the midcap and small-cap segment despite USDINR crossing above 83 and Brent trading above 90$. A similar euphoric phase in the midcap and small-cap phase was witnessed in 2008 when the monthly RSI displayed V-divergence from the overbought zone and prices followed with a steep decline.
Currently, Brent crude prices have crossed a crucial hurdle of 90$ and should force short covering to 107$ in next few days. For Nifty 50 , watch for 19432 in the spot market for reopening short positions. The underperformance of Nifty 50 compared to broader markets is a matter of major concern as Nifty 50 derivates are often used to structure short positions before a massive decline.
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Markets began on a positive note on Monday with Nifty surpassing the psychological mark of 19,500 and formed a doji star on the candlestick along with a negative reversal in RSI. As doji star has occurred after retracing 38.2%, we can expect a major reversal on the breach of yesterday’s low which is placed at 19432.
Meanwhile, a negative reversal would also tempt many traders to open short positions in the market with a stop loss of 19,529 on a closing basis. The Brent crude prices have also moved in the breakout terrain with immediate upside seen at USD 100 a bbl and are likely to act as a key trigger to forcing Nifty below 18,000.
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Markets witnessed a sharp jump on Friday which helped Nifty to end 5 weeks of losing streak and post weekly gains of closer to 1%. Friday’s rebound was mainly on the back of retail euphoria which suddenly pumped an additional Rs 32,000 crore into the system compared to the previous day and this may be termed as unusual buying to protect weekly closing. Friday’s up move has the maximum potential to extend towards 19,520 which turns out to 38.2% retracement of the entire down move and is likely to be followed by a severe down leg towards 17,500.
The key trigger which may cause a sharp decline in Indian markets is Brent crude crossing the USD 90 a bbl mark after a recent upsurge beyond 38-week highs. overall outlook for the market remains highly cautious as US bond yields especially 2-yr and 10-yr have already shown an inverted curve. Short positions can be added on moves below 65,174 in Sensex.
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Markets attempted a rebound on Monday on the back of upbeat global markets but failed to extend beyond 19,350 which was followed by marginal gains to end around 19,300. The rise in India’s VIX above 12% exhibits caution as the next leg of decline could have severe repercussions.
The spread of Nifty 50- Nifty 500 index which is a mere difference in values of the index suggests aggressive shorting is taking place in high market cap stocks to create a synthetic hedge in the broader markets. The next decline trigger may come from US markets after USDJPY reaches crucial resistance and most of the time extended decline in US markets has been triggered from a sharp decline in USDJPY.
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Markets succumbed to selling pressure on Friday with prices opening lower and thereafter closing at the lowest point of the day by breaching a low of 19253.60. This breach has confirmed the start of Wave (3) of impulse degree which would have a minimum target of 17,657 and can even extend to 16,463.
From a trading perspective, this is an ideal time for opening short positions in Nifty September futures with stop loss placed at 19,565. The massive selling of FII of more than Rs 4500 crores on Friday also corroborates to bearish trend in markets. With the breakdown in spread data of Nifty 50- Nifty 500, we may see Nifty 50-based derivatives and ETFs being used to create massive short positions in international markets for hedging exposure in broader markets.
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Nifty opened with a gap up on Thursday but selling in the second half in financials stocks forced Nifty to end in the negative terrain turning the entire day into a bearish engulfing line on candlestick charts.
As reversal has occurred after retracing 38.2% of the down move, it may signify end of corrective up move of Wave 2 and is likely to be followed by Wave 3 in the coming days. Applying for 261.8 pct Fibonacci extension, the immediate price target falls in range of 17,500-17,700 which may come in line with the movement in global markets. The global markets like Dow Jones has already have opened wider cracks below 34,300 which may be a sign of Global Warning.
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Markets managed to post gains on Wednesday on the back of support from Bank Nifty which rallied more than 1% on the back of a drop in USDINR and lower Brent crude prices. However, the setup for Nifty still calls for caution and resembles a similar situation that occurred on Sep-Oct 18.
The price setup in Nifty 50 indicates that Wave (3) should resume after the current up move which can fall in a trajectory of either 16,345 or 17,539. The S&P 500 equal Weighted Index has also a formed larger Bearish Triangle which also justifies for 10-15 pct quick downside in the near term. The resistance for today’s trading session is seen at 19,535 which turns out to 38.2 pct retracement of the entire down move.
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Market action may suggest “All is well” based on the performance of “B” Group stocks movement in the past few days. But underperformance in Nifty 50 indicates a sign of a major warning. The Indian markets have a history to replicate movement in US Banks with a lag effect of 15 days and some of the giant US Banks namely Goldman Sachs are already showing signs of a major breakdown.
The weekly spread chart of the Nifty 50-NIfty 500 Index also collaborates with this warning, with price data showing aggressive shorting in Nifty futures for hedging broader portfolios. A Breakdown in the Spread of the Nifty 50-NIfty 500 Index would trigger algo selling in Indian markets which may force Nifty 50 well below 17,000 in a quick span of time. The crucial levels to watch in Nifty futures would be 19,265 for opening short positions.
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Markets began the week on a positive note with Nifty ending closer to 19,400 despite continuous selling from FIIs. The Nifty setup clearly calls for caution after the initial impulse leg of decline and the next leg of decline for Nifty could be well below 17000.
The short-term charts suggest that selling pressure in markets could be reinforced on a move below 65,175 in Sensex and the next leg of the down leg could begin from the Banking sector. On the upside, the major hurdle is seen at 19,483 which turns out to be the previous week’s high.
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Markets tend to remain strong as long they hold comfortably above the previous highs, while below the same - turns the recent breakout void. In Nifty terms, we expect an immediate target of 18,200 on breach of 19,265 in Nifty futures.
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The breakout in India VIX above 11.5 along with USDINR sustenance above 83 in international exchanges poses major threat to the India markets. The rise in USDINR would provide early indications about unwinding in long positions in Indian offshore indices like BNY Mellon INDIA DR Index which currently showing signs of reversal and thereafter breakdown from bearish running triangle with downside potential of 34%.
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The outlook for market remains bearish with spread of Nifty 50- Nifty 500 breaching key support. A breach of support would indicate more addition of short positions in Index futures in the coming days in order to hedge their existing portfolio. We expect markets to face sudden jerk on breach of the recent low of 19296 with immediate target seen at 18200.
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The Dollex 30 i.e., Sensex in USD terms has already confirmed a lower low, which opens a case for a 7-8% correction in immediate terms. In Sensex terms, critical breakdown levels are placed at 65174 below which, it would confirm start of impulse degree Wave 3.
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The market ended with marginal losses after failure to cross above 19600 while India VIX confirmed a breakout after closing above the 11% mark. Both USDINR and Brent Crude rise pose a major risk to the Indian markets with Brent Crude positioned to hit USD 100 a bbl in the next few days.
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