BJP was leading and markets touched 10900 in opening trade. As soon as the leads vs actual win started to get clear, Nifty started declining. 10692 was a tripping point which was broken on Friday. There were other reasons too.
While I was until the election result, there were many factors crying out loud for a fall. So I decided to be a bull until election day and then become neutral as on the go basis. With no adverse news (which was yet to come for election results), Nifty will scale highs steadily and slowly. Bad news might build up but it will not affect the upward rally much till the D-Day (Election Results). So what contributed to this thinking: –
1. Majority of stocks under FNO section were not giving credible buy signals. On the contrary, many were either rangebound, dead cat bounces or . Those giving buy signals of some form were not honouring the buy signals.
2. Crude was touching multi-year high along with USDINR . Forcast for crude to be between $70-78 was considered normal and not worrisome for Indian Economy. Add to it the depreciating rupee and BOOM…! We were already hearing about CAD increasing.
3. In Karnataka Elections, it was a fight to the death for the Congress. BJP’s hypocrisy is to blame for their loss. They cannot turn the rules according to their whims and fancies. First, they were invited to form a government when they were in minority and post-poll alliance and next they expect to be invited when they are the single largest party. Congress played wisely. If the governor of Karnataka had invited Congress+JDS with the previous precedent, things would have been different. This hypocrisy simply invited the decision of governor to be challenged. Either it should have been cancelled or other states will stake claim to government according to current precedent. And that happened. BJP’s face to grab power at any cost stood exposed and today CM had to resign merely after 1 or 2 days. This defeat will pave way for future alliances in forthcoming elections and in general election 2019. Regional parties along with Congress can become a spoiler for Modi Wave. Which kind of spells into a political uncertainty category or policy paralysis category.
4. Open Interest is another key parameter to look into. For last 3 days, call writing is significant on 10900, 10800 and finally on Friday on 10700, 10600.
All the above scenarios do not fare well for the market in the coming days. I expect the market to open with a gap-down on Monday. Previous support lies between 10537-10560, so that’s where I am expecting for the market to open. After that its pure speculation. Looking at the irrational behaviour and of the market, we have following possibilities
Normal Opening and a Slide – Its a new normal. Market does the opposite of what we traders are thinking. It may even be a gap up initially, but price can drag down eventually.
Gap Down Opening and filling of the Gap
Gap Down and further slide
I am at least looking for a target of 10480 till this expiry. Rest market is the boss. Let’s see what we have for rest of the 9 trading days.
Stock specific activity, if I find interesting, I keep posted through Twitter.