Interesting Development happening in Bank Nifty Futures on the daily charts. Bank Nifty Futures had broken the 15 days of consolidation movement with a strong breakout and also close below the bottom of the consolidation zone 18760. This post is to analyze whether the breakout is really strong or not. Market Sentiment is really negative and the last fridays sentiment continued on monday as well.
Nifty Daily Sentimental indications are positive before the FED meet and Bank Nifty continue to be negative and at highly oversold levels. However what worrying is the weekly sentiment in Nifty and Bank Nifty turned negative last week and so far this week continues to be negative. Only Nifty weekly price distributions above 7800 sounds positive in the long run and retail traders are confident of writing 7600CE for the current option series.
Nifty and Bank Nifty weekly sentiment maintains positive despite weakness in the market. Last week DII continued their relentless buying mode despite weakness in the market and with the continue FII selling pressure. US Market (S&P500) closed with marginal weekly gains with a surprising fierce up move on the friday trading session. India VIX continued its downtrend despite weakness in the market which indicates lack of fear in the market at this point.
Nifty Daily continues to be in positive sentiment for the last 5 trading sessions. However the weekly sentiment holds negative for the last three weeks and likely to continue for yet another week. On contrary Banknifty sentiment turns positive on Daily and weekly charts after the friday’s price action. Bank Nifty is expected to outperform Nifty in the upcoming trading sessions.
Nifty and Bank Nifty futures are showing opposite trends this week and bank nifty continue to under perform nifty futures for time being. Bank Nifty futures sentiment continues its negative sentiment for the last two trading sessions. However Nifty Sentiment holds positive for the last 5 trading sessions with the double outside day pattern on the recent charts.
The recent move in Nifty Futures are clearly driven by Short term players. Nifty Futures positive sentiment continues however sooner or later we can expect the trend to reverse when the sentiment gets over heated. Bank Nifty is showing divergence as the sentiment turns negative and continues to underperform Nifty Futures.
Nifty and Bank Nifty weekly future charts suggests the RSX is still in declining mode and at the extreme. Current downtrend is expected to end this week before bottoming out. Support is expected around 7500 zone and 15600 zone respectively. Failure to hold the support zones are likely to be more bearish for the current downtrend.
Last week nifty futures opened gap down at 8010.1 and crashed -5.9% last monday. The next day nifty made a panic intraday bottom at 7665 followed by a sharp recovery to test 8125 during the same week. Volatility in the market inclined up and it is expected to continue in the near future. Naked option writers has to be cautious as the risk reward ratio with a given volatility is very low at this point.
Daily Sentiment is Positive in Nifty futures and in Bank Nifty futures. However RBI policy announcement on 4th Aug will dictate the trend. Any Interest rate cut might induce negative sentiment in the markets. Net FII (FPI) investment in Equity market stood at 5,319 crore in July. It should be noted that FPI are net sellers and pulled 9112 crores from equity market during the month of May and June 2015.
Last Friday NSE Equity market turnover is on record volumes trades at more than Rs 43,621 crore. Previous high in equity market segment was Rs 41,113 crore hit on April 21 this year. Nifty Index and Bank Nifty Index made a big comeback on last trading day with bigger gain and made a weekly returns of -0.3% and 1.48% respectively.