In two days, has the tide reversed?
On 16th May I wrote “..So overall picture is bullish just because of positive global cues, improving covid figures and positive lead shown by SGX Nifty Friday night…”. On 17th Market rallied and Nifty closed 245 points up whereas Banknifty closed 1289 points up. But that was Monday. Two days later tide has reversed. How? Let me explain.
1) Both FIIs and DIIs, today, sold (net) in Equity Cash segment by 697 Crs and 852 Crs respectively. FIIs were net buyers in stock futures by only 141 Crs and net sellers in stock futures by 1425 Crs. It should be noted that only yesterday FIIs bought in each segment and they bought (net buying) index futures worth 3076 Crs- a big purchase- highest this month so far. So what happened in last 24 hrs that prompted them to change its stance. Let us investigate.
2) Covid data- The number of new covid cases are rapidly declining in few states and big cities but increasing in some states. Overall the number is declining but number of deaths due to Covid-19 are continuously increasing. Today at 8 am govt. reported highest single day number of 4529 deaths. Add to this the fact that actual numbers from UP, Bihar and Gujarat are not being reported according to local newspapers. The disease is also reportedly entered villages where basic healthcare is not available and data is not reaching on time. In other words, there too infections also could be much higher than being reported.
3) In lot of industries, it is now being seen that factories are shut or are operating at less than full capacity because of two reasons- One, labour and workforce is less due to Covid fears and restrictions from various state governments. Two, non- availability of industrial oxygen since there is still severe shortage of medical oxygen. This non-productivity will soon translate into numbers.
4) On Monday WPI data for April was reported as 10.49- all time high on YoY basis. In March it was 7.39%. Even that was high but an increase of 310 basis points is considered huge. Now that shows the picture for months to come and it is worrisome indeed.
5) Global markets- Currently DOW (DJIA) is down by 490 points (1.44%). NASDAQ and S&P500 too are down by 143 (1.07%) and 53 (1.30%) points respectively. The exact reason, apart from Bitcoin crash, is still unknown to me. Major European markets ( FTSE, CAC, DAX) too are all down by more than 1.25%. SGX Nifty is still stable at 15,045 but we have a lot of time to go before it closes.
So as we see, a lot has happened in three days. Market which was felt oversold at 14,678 on Friday did rally on Monday and reached at 15,108 (yesterday’s close) where it was seen as overbought and correction ensued. And as we are seeing, this is likely to go down still further tomorrow. So I am on short side for tomorrow’s expiry. No clear-cut levels are seen for Nifty and banknifty for shorting otherwise would have suggested those but I have marked a resistance and supports. Use resistance to short if Nifty reaches there and use supports to book profits in short trades. Do NOT buy at supports, it could be disastrous.
1) Both FIIs and DIIs, today, sold (net) in Equity Cash segment by 697 Crs and 852 Crs respectively. FIIs were net buyers in stock futures by only 141 Crs and net sellers in stock futures by 1425 Crs. It should be noted that only yesterday FIIs bought in each segment and they bought (net buying) index futures worth 3076 Crs- a big purchase- highest this month so far. So what happened in last 24 hrs that prompted them to change its stance. Let us investigate.
2) Covid data- The number of new covid cases are rapidly declining in few states and big cities but increasing in some states. Overall the number is declining but number of deaths due to Covid-19 are continuously increasing. Today at 8 am govt. reported highest single day number of 4529 deaths. Add to this the fact that actual numbers from UP, Bihar and Gujarat are not being reported according to local newspapers. The disease is also reportedly entered villages where basic healthcare is not available and data is not reaching on time. In other words, there too infections also could be much higher than being reported.
3) In lot of industries, it is now being seen that factories are shut or are operating at less than full capacity because of two reasons- One, labour and workforce is less due to Covid fears and restrictions from various state governments. Two, non- availability of industrial oxygen since there is still severe shortage of medical oxygen. This non-productivity will soon translate into numbers.
4) On Monday WPI data for April was reported as 10.49- all time high on YoY basis. In March it was 7.39%. Even that was high but an increase of 310 basis points is considered huge. Now that shows the picture for months to come and it is worrisome indeed.
5) Global markets- Currently DOW (DJIA) is down by 490 points (1.44%). NASDAQ and S&P500 too are down by 143 (1.07%) and 53 (1.30%) points respectively. The exact reason, apart from Bitcoin crash, is still unknown to me. Major European markets ( FTSE, CAC, DAX) too are all down by more than 1.25%. SGX Nifty is still stable at 15,045 but we have a lot of time to go before it closes.
So as we see, a lot has happened in three days. Market which was felt oversold at 14,678 on Friday did rally on Monday and reached at 15,108 (yesterday’s close) where it was seen as overbought and correction ensued. And as we are seeing, this is likely to go down still further tomorrow. So I am on short side for tomorrow’s expiry. No clear-cut levels are seen for Nifty and banknifty for shorting otherwise would have suggested those but I have marked a resistance and supports. Use resistance to short if Nifty reaches there and use supports to book profits in short trades. Do NOT buy at supports, it could be disastrous.
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