Stock Market Crash 2016 and Index Futures Sentiment Outlook

Selloff in the Global Market and Indian Stock market goes intensive last week and in the last two months alone Nifty had lost nearly 12.33%. Such a deep cuts in the market are more likely due to Global Sentiment, Chinese Market manic sell-off, local NPA Banking Crisis. Raising credit spreads – Junk bond market is flashing out warning signs and the spiking Gold-Oil Ratio above 30 year high are some of the pre-warning signals for this market crash. It should be noted that Indian markets dropped despite strong GDP numbers.

Last Week Major Economic Data Release

December IIP at -1.3% vs 3.6% YoY; April-December IIP at 3.1%

— EconomicTimes (@EconomicTimes) February 12, 2016

CPI DATA: January CPI At 5.69% Vs 5.61% In December

— Bloomberg TV India (@BloombergTVInd) February 12, 2016

BREAKING: India's GDP expands 7.3% in quarter ended Dec. 31 versus estimate for 7.1% growth: https://t.co/uCKKGQedqv

— Bloomberg India news (@BNIndia) February 8, 2016

GDP DATA: Q2 GDP Growth Revised To 7.7%

— Bloomberg TV India (@BloombergTVInd) February 8, 2016

NSE Major Sectoral Performance (Year To Date)

Among the Indian Sectors PSU banks are the top loosers and lost more than 32% of its weight. Bank Nifty CNX Infra, CNX Finance, CNX Metal, CNX Media lost more than 15% of its weight. CNX Midcap and CNX Small Cap are heavily under performing nifty and lost 15.17% and 23% respectively

NPA issues and Banks

Default Risk at State Bank of India Surges on Bad Debt Concerns @BloombergTVInd @shraddha_babla @Anupria @MiniMenon pic.twitter.com/r9D8n4tuxv

— Hiral Desai (@Heeraal) February 10, 2016

Among the major banks State Bank, PNB, Canara Bank, Bank of India are the major banks which lost more than 50% from its 52 week high. However banks like HDFC Bank, Yes Bank, IndusInd Bank, Kotak Bank are relatively outperforming their peers and its underlying index Bank Nifty.

Nifty and Bank Nifty Index Future Sentimental Outlook

Nifty Future EOD Charts

Nifty and Bank Nifty Daily Sentiment continues to be in sell mode however last friday panic recovery had created support levels around 6920 and 13870 levels respectively and also the friday recovery in US and European markets would have erased the extreme negative sentiment. Those who are in longs should be cautious only if the support levels are broken.

Near term resistance level in Nifty futures comes around 7260 and 73320 zone and Bank Nifty resistance comes around 14550-14671. It should be noted that chinese markets are in long holidays and markets will be opening on Monday. Any positive suprise from china could further ease out the negative emotions from the Global markets and boost further confidence for a follow up rally in Global markets.

Bank Nifty Future EOD Charts

Stats from Twitter Media

12 biggest intra-day #Sensex falls pic.twitter.com/lZuleuUNCM

— ETMarkets (@ETMarkets) February 11, 2016

The Baltic Dry Index. Now almost 98% below its 2008 peak. pic.twitter.com/qzg8UgsF5s

— Stuart Wallace (@StuartLWallace) February 9, 2016

Charts: Inflation in Jan 2016 at 5.7%, Highest Number Since Sep 2014. Who's the culprit? https://t.co/LvHBudVAbM RT pic.twitter.com/kiNZkk3h3K

— Capital Mind (@CapitalMind_In) February 13, 2016

Negative Bubble in Sensex Mean Reverting. Last time happened during OCT 2013. #FCO #DSLPPL @InterestRateArb pic.twitter.com/CXzXeHa7wF

— Marketcalls (@marketcalls_) February 13, 2016

11th Feb, PCR wg at extreme 4.29. When reading is >3, t+20 is 67% close high with Avg 2.52%, Median 2.03%, Avg win 4.31%, Avg Loss -1.06%

— Kesava Kumar A, CMT (@HARVIS_) February 13, 2016

Bullish sentiment near historic lows. What happens next? https://t.co/5U1pZf2Rp8 pic.twitter.com/olUr5gTdw1

— LPL Research (@LPLResearch) February 12, 2016

Open Interest Lookup

Nifty Options open interest lookup shows that currently option writers are concentrated over 7300CE, 7400CE, 7500CE put writing. And the participant wise open interest data indicates that currently FII are holding naked puts and writing calls for this series. However retail traders are holding net naked calls and writing puts.

Is the Market Bottomed out in the short run? Looks like it is and only market has the rest of the answers!