11 Aug ’23 Post Mortem on Nifty Full Short, But VIX disappoints

NSE:NIFTY   Nifty 50 Index
The first 5mts candle today had a swing range of 0.34% ~ 66pts but this did not drive up the OTM premiums. The majority of traders have forgotten what fear was like. India VIX was up 2 to 3% then and still in the 11.5 range. The complacency has gotten into the traders so deep that they think some dip buyers will come in and rally the markets by closing hour.
Today we did not witness that, Nifty50 for a change did not see dip buyers in the last hour. Instead the selling was intensifying. Even then - there is no fear, in fact VIX closed with just a 1.07% gain. As I write this article, US VIX is 15.78 and SPX is just 3.23% down from the 52 week highs. Also now could be the best time for the big bears to enter the market as the valuations & prices are lofty and they get good meat!
Glad yesterday’s short call worked out, but nothing to be proud of as 19296 (recent swing low) was not taken out. We did not even get near it today. You might be thinking I am pessimistic about Indian stock markets and a permabear - the reality is I am not.
There is a severe disconnect between the stock valuations and the actual economy. I will try to publish the research “Why a full blown depression is a blessing for the poor '' by this weekend. The prices of day-to-day essentials are so high that low income households are slipping into poverty.
Stock markets reflect the rich, not the poor. The broader economy can remain down and stock markets up for a long period of time, its just euphoria. But what bends usually is the stock price!
On the 1hr TF, Nifty50 has fallen back below the bearish trend line. We will continue to go short till this status quo holds. The first target to take out will be the recent swing low of 19296. The next support comes at 19190.


The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.