Just few days back, on 25th February I had written (for my post on 26th February) that Indian markets are in strong bearish phase and listed three reasons why will we suffer a great fall, advocating sell on any rise with proper reasons culled from charts, option chain data and FIIs, DIIs buying and selling figures. Nifty Closing on 25th was at 11798 and Nifty closing on 28th (last Friday) was at 11201.75- a fall of around 600 points in just 3 days! Corona virus outbreak is breaking into new geographies and increasing number of countries are reporting new cases. According to website worldometers.info there are 86993 cases of corona virus infections across the world now with 2979 confirmed deaths. Iran, Italy and South Korea are worst hit among countries outside China. Please check my video posted on youtube under channel name Market Movers India for slightly more exhaustive and analytical content.
Having said all this, now I am saying Indian markets are most likely to bounce back from these levels. How? Why? Let me list reasons one by one-
1) Stability in cases and reductions in new deaths from China means that soon manufacturing and other important economic activity will resume. And knowing China’s ability to scale up, it is very much possible that in no time it can cover lost ground and resume supply chain activity at their earlier normal speed.
2) On Friday, FIIs were net sellers by 1428 Crs and DIIs were net Buyers by 7621 Crs. Read this figure again- DIIs were net buyers by 7621 Crs
( Bought : 11757 Crs and Sold : 4136 Crs). Normally DII buying figures are in the range of 3500-4000 Crs. First time in last so many months I am seeing net buying figure above 7500 Crs ( more than 5 times FII sales figures). This means DIIs will now go to any lengths to buy stocks since the valuations for a lot of stocks are very attractive.
3) Look at DJIA (Dow Jones Industrial Average) 15 min chart on Friday. In last 15 minutes it jumped from a low of 24767 to close at 25392, a jump of 625 points, traversing the entire intraday range. Such high speed recovery, that too during weekend, shows pent up buying appetite among institutions/HNIs. This will definitely cast its effect on world markets on Monday.
4) Now let us move to Nifty daily chart. On daily chart Nifty has made a complete candle outside the lower band of Bollinger Band. Whenever such occurrence is seen, a bounce-back is seen within next 2-3 days for sure.
5) RSI on daily chart is at 24.67- much below oversold level of 30.
6) Nifty is right now in weekly demand zone- meaning a reversal is on cards.
So keeping in mind all these reasons, I expect a bounce-back on Monday itself. Tomorrow if Nifty opens gap down I will look at buying in small quantities at every fall. The supports and immediate resistances are shown on 15 min chart. I certainly expect this weekly expiry somewhere near 11500. I could be wrong but above listed are my reasons for this optimism.
All the best. Happy trading.
Having said all this, now I am saying Indian markets are most likely to bounce back from these levels. How? Why? Let me list reasons one by one-
1) Stability in cases and reductions in new deaths from China means that soon manufacturing and other important economic activity will resume. And knowing China’s ability to scale up, it is very much possible that in no time it can cover lost ground and resume supply chain activity at their earlier normal speed.
2) On Friday, FIIs were net sellers by 1428 Crs and DIIs were net Buyers by 7621 Crs. Read this figure again- DIIs were net buyers by 7621 Crs
( Bought : 11757 Crs and Sold : 4136 Crs). Normally DII buying figures are in the range of 3500-4000 Crs. First time in last so many months I am seeing net buying figure above 7500 Crs ( more than 5 times FII sales figures). This means DIIs will now go to any lengths to buy stocks since the valuations for a lot of stocks are very attractive.
3) Look at DJIA (Dow Jones Industrial Average) 15 min chart on Friday. In last 15 minutes it jumped from a low of 24767 to close at 25392, a jump of 625 points, traversing the entire intraday range. Such high speed recovery, that too during weekend, shows pent up buying appetite among institutions/HNIs. This will definitely cast its effect on world markets on Monday.
4) Now let us move to Nifty daily chart. On daily chart Nifty has made a complete candle outside the lower band of Bollinger Band. Whenever such occurrence is seen, a bounce-back is seen within next 2-3 days for sure.
5) RSI on daily chart is at 24.67- much below oversold level of 30.
6) Nifty is right now in weekly demand zone- meaning a reversal is on cards.
So keeping in mind all these reasons, I expect a bounce-back on Monday itself. Tomorrow if Nifty opens gap down I will look at buying in small quantities at every fall. The supports and immediate resistances are shown on 15 min chart. I certainly expect this weekly expiry somewhere near 11500. I could be wrong but above listed are my reasons for this optimism.
All the best. Happy trading.