By Anand James
We had gone into last week, asserting that visibility past 18800-19000 is limited. Incidentally, the developments of the last few days confirmed that this region was indeed a supply zone, systematically hammering prices on every rise, forcing Nifty to briefly dip below the 18470 level identified in the last week’s note as a marker that could bring 17850 into the radar. The question now, hence is, if situation has turned worse enough indeed to play the plunge aiming 17850.
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In fact more than 60% of the NSE stocks have fallen more than 4% from their respective all time peak, confirming that profit booking has indeed taken the icing off the market. And among F&O stocks, only 12% closed Friday with a long build up stance, as opposed to 20% building shorts and another 23% liquidating longs. A morning star candlestick pattern in the hourly time frame sets up a slightly positive opening for Nifty on Monday. However, if such positivity is unable to clear 18560, expected Friday’s fall to resume, aiming 18320-100.
A similar pattern is also visible in Bank Nifty, but even better formed, setting up a dash towards 44000. However inability to float above 43400 might signal rejection trades weighing in, calling for potential drop to 42600 initially. Incidentally, banks continue to look in a better shape, with 60% of them trading with under 2% cut from their respective all time peaks. Either way, directional trades appear more feasible in Bank Nifty than Nifty.
(Anand James, Chief Market Strategist at Geojit Financial Services. Views are author’s own.)