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What are the charts telling us about the state of the market?


Nifty retested the Friday’s low levels at 9,000 mark, and witnessed an intraday bounce. However, a particularly elevated VIX is one of the key the explanation why that steadiness isn't getting transformed into a decent price-wise bounce.

A consistent try against shielding key mental levels, for example the 9,000 mark on the Nifty, may result in steadiness. The just right section out there internals contains credible bounces in many shares and visual patterns of bullish RSI divergences on the hourly charts of many particular person shares.

How lengthy might the pain persist?

Bear markets most often move in three phases:
1. Sharp correction: We are most likely within the finishing stages of Phase 1, the place now not many traders/investors can catch this sharp correction. Volatility index at its top. Indicators and sentiments pass completely awry.

2. Reflexive rebound: This section is the place we consider that a slew of certain news glide occurs. The marketplace becomes more hopeful that most likely an answer has been reached to mend the issue, and so on.

three. Prolonged downtrend: This is the most painful portion of a bear trend, the ‘elementary’ information issues continue to stay gradual/weak. There is more gloom and unhappiness around the prevailing sentiment. Patience provides way for even the best.

I consider we're at the finishing stages of Phase 1 and a meaningful rebound (or steadiness) may occur pretty quickly.

Oversold Put-Call ratios, squaring off short positions, extraordinarily overheated RSI on India VIX (RSI level of 94) are few indications that a rebound may occur quicker than later.

Which pockets are taking a look just right and which don't seem to be?
Depending on the kind of rebound, certain sectors would get started to pick out up. However, the approach would nonetheless should be defensive within the first level, no less than. Hence I consider the pickup may happen in sectors such as IT, pharma and make a selection FMCG names. However, the second level will apply temporarily with short covering conceivable on many of the over-owned short positions on shares.

Key levels to look at
In occasions of panic/capitulation, one has to watch for ‘behaviour’-based levels somewhat than any particular payment/indicator-derived levels. We consider the panic peaked when the index hit the decrease circuit prohibit underneath 8,500 level. Which, I consider, might be the most important give a boost to for the quick time period and main resistance exists near the 10,300 (gap resistance) mark.

For Bank Nifty, key give a boost to levels would continue to be near the 21,000 mark. A major resistance exists at the 26,000 mark (gap resistance).


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