New Financial Year about to start and it is always refreshing to kick start with a unbiased outlook especially when a new derivative series starts. Structurally so far correction in Nifty is a complex wave-like downtrend in the last two months. Feb 2018 index futures lost 4.9% and lost 3.8% during the month of Mar 2018.
Nifty is trading around All time high. October Futures is more of one-sided movement with an approximate swing of 500+ points swing. The trading sentiment is holding positive across the timeframes (Daily, Weekly, Monthly). No weakness yet from the market internals perspective. Trading Positional Shorts could be still not a profitable one unless you understand the inventory conditions of the market participants.
On the daily timeframe consolidation is seen for the last 7 trading sessions. Both Nifty Futures and Bank Nifty Futures are showing an intraday selloff in the first half of the session followed by second half of intraday recovery from the bottom for the last 7 consecutive trading sessions. And moreover Nifty futures is currently at the visual resistance zone @ 8835. so far Nifty Futures is struggling to close above this visual reference level.
The RBI cut benchmark rates by 25 basis points (bps) on 4 October, bringing down the repo rate from 6.5% to 6.25% since then there is a significant underperformance in banknifty futures as compared with nifty futures. And this underperformance in banknifty futures is expected to continue in the upcoming trading sessions as every minor rallies in banknifty gets rejected at higher level and sellers stepping
If you frequently track gap in Nifty (Spot) you would understand that there are so far 10 unfaded gaps since the start of March 2016. Current leg of rally is almost 8 months old and during this leg we had hardly made only 2 gap downs, 19 gap ups and 10 unfaded gap ups. which indicates that we are in a emotional buyers market.
Nifty Spot is currently trading around 8636 levels and so far nifty had travelled roughly 1800 points from Feb 2016 low of 6825. Intermediate Resistance is coming around 8635 and one can expect some consolidation around this zone for some times. Price could travel back and forth around this zone and could still remains in the range between 8450-8700 for the first week. However strong price push and close above 8700 suggests that we are more likely to test 9000 back again for this series.
Nifty and Bank Nifty sentiment turned negative on the EOD charts on the event of BRExit poll announcement. And the global markets also strongly reacted for the BRExit poll outcome. USDINR Spot closed around 67.8264 and GBPINR lost almost 5%. Reality, Capital Good and Metals are the Top Sector losers with looses mounting to more than 3% each.
If you understand the participation wise open interest post the budget retail traders are keep on building their shorts till to date and the FII’s are building their longs to the extreme till to date. This is a clear tug of war between retail traders and FII/FPI’s in index futures.
After 6 consecutive losses nifty spot made an attempt to close positive marginally. Nifty Daily sentiment turned positive at open and maintained the positivism throughout the session. Previous Sentimental Gap Down levels are at 8217 and 8252 and the professional gap 8359 zone remains unfilled so far. Overall traders sentiment is bearish on nifty as people has mixed opinion about Bihar polls.
Nifty and Bank Nifty Daily Sentiment oscillators are holding positive and currently. Minor Resistance zone coming around 7870 and 16800 respectively. Breakout is likely to be on the upper side once the minor resistance zone taken out.
Nifty and Bank Nifty August Futures Daily Sentiment turned positive on friday. India’s July WPI inflation figures came at -4.05% YoY Vs June WPI was -2.40%. Despite the Chinese Yuan Devaluation and weaker USDINR sentiment market rallied from the lows on positive IIP figures ( grew 3.8%) and possible rate cut sentiment due to negative inflation growth.
It is interesting to note that DII’s are relentlessly buying the equity market right from 12th June 2015 despite Greece Exit fears, Global Meltdown and Indian Market seems to be resilient to such macro events. Monday panic gap down in Nifty Index countered by late session rally on both monday and tuesday.