Nifty Short-Term Trend Turning Negative – Market Profile Update

The short-term trend for Nifty appears to be shifting towards the negative, encountering intermediate resistance in the range of 21920-21950. Additionally, a top-down analysis reveals divergent signals: the short-term trend is declining, the medium-term trend remains sideways, and the long-term trend is upward. These differing trends across the three timeframes indicate a lack of conviction on the immediate upside.

Market Profile charts on RBI Policy announcement day bring an emotionless wave type selling on every rise with a clean elongated structure with no visual nuances or visual references. Higher timeframe sellers are actively pushing the price down and more underperformance is seen in private-sector banks

RBI’s Stance on Regulatory-Focused Approach Impacting Private Sector Banks

Yesterday’s RBI press conference highlighted the central bank’s cautious and regulation-focused approach towards managing the banking sector, emphasizing financial stability and inflation control over short-term liquidity boosts or growth stimulants. This stance has significant implications for private banks, potentially influencing their stock performance in the short term adding more pressure to the banking stock on the downside.

The RBI’s strong corrective actions, including the potential suspension of operations for non-compliance, were justified as necessary for maintaining a stable financial system. The RBI believes that a robust regulatory framework and adherence to it are crucial for the health of the banking sector and the broader economy.

Nifty Daily Sentiment and India VIX

Yesterday Daily Trading Sentiment turned negative indicating that immediate upside odds are very limited. The India VIX index is still not in the mood to collapse after the RBI event which is surprising.

Downward Focus is overall shifting negative for Nifty Futures which lowers the downside targets for the Feb 2024 series to 21600 and 21450 in the short term.