AVENUESOFINVESTMENT

Is Nifty foreseeing something that is not audible/visible?

NSE:NIFTY   Nifty 50 Index
NIFTY 50 EOD ANALYSIS -20-07-21

IN SUMMARY

Open / High / Low / Close
15703.95 / 15728.45 / 15578.55 / 15632.1
Trading Range Low to High: 129 points
Likely Max Realistic Opportunity @ 50%: 65 points
India VIX: 13.21 / +4.18%
FII DII activities: -1,961 Crores

CHART BASED CONCLUSIONS --

Pre Covid ATH had given similar gap-down candles and even now we have similar gap-down candles from the present ATH . I have placed arrow marks to show the same.
This is not a good sign - the undercurrent indicates a build-up of fear emerging from the global Covid situations.
Intentionally, I have shown a 15 minutes chart for the last 1 month and the prices seem to be going all over. Though a bull market climbs a wall of worry, the distribution of the price range is indeed worrying as it does not show strength which is essential for a market to be termed as a bull.

TOP 40 LOSERS

40 out of 50 scrips in Nifty 50 ended in negative. So I have changed the header for this section as it will be unfair to simply pick the top 3 and talk about them.

However, for the sake of good records, these 3 names are - HINDALCO , INDUSIND BANK & TATA STEEL.

In all, there were 13 scrips which fell more than 2%! Clearly, there is something going wrong somewhere - I do not want to speculate the reason, but this is not one would expect from a bull market.

TOP 3 GAINERS:

ASIAN PAINTS - Amidst extreme pessimism, the scrip registered a towering presence with a perpendicular move which was better than the previous such move of 14-5-21 and from there, the scrip moved 400+ points.
ULTRATECH CEMENT - By EOD , it almost gave up half of the gains registered so profit booking may have kicked in, however, it nevertheless registered another ATH close which indicates that the scrip is well cemented at the higher levels.
HINDUSTAN UNILEVER - The FMCG giant helped by throwing its weight in and stopping Nifty from falling further. Like Ultratech, it too has given up some of the overall gains made during the day.

POSITIVES

Finding positives in the last 3 days has been a test of being an Optimist.
INFY and TCS did not end in red and closed in mild green itself is a big plus.
TCS closed above 3200 and made a smart recovery from lower levels while INFY felt shivers even before touching the 1560 resistance line and barely managed to close at 1550.
RELIANCE showed resilience in the AM session when Nifty was in a sell-off mode. The fact that it is trading still above 2080 gives some indication that its Q1 numbers may not be as disappointing as the other Q1 numbers have been.

NEGATIVES


40 /50 in red. There cannot be a greater negative than this.
And to add fuel to the fire, the Banknifty family is all red with the least redness being shown by KOTAK BANK at -1.17%.
HDFC twins, ICICI BANK, and AXIS BANK made it all the more harder for the indices to stay away from being red.
Nifty closing at 15632 and Banknifty breaching 50 DMA and closing below 34500 is a big negative.
FIIs sold in excess of 2,500 Crores. So some more weaknesses in the store.

TRADING RANGE FOR 22-07-21

15500-550 resurfaces as the last line of defense for the bulls as Nifty made a low of 15578 on 20-7. Resistances are dime a dozen and will remain so unless broken. A Nifty close above 15950 is the only way these hurdles would become the support lines.
34200-34300 is now the support area for Bannifty with 34800-35000 as the resistance band.

INSIGHT / OBSERVATIONS:

Nifty is breaking supports as if they never existed. And takes resistance even at every available line where it took support earlier.
A significant spike in VIX in AM and post PM recovery there was a relief in the VIX which suppressed option premium - a boon for the Option Sellers.
Whenever there is a sharp fall and extreme pessimism, the FII-DII numbers get delayed - as if NSE has to work harder on such days.
RELIANCE and KOTAK BANK witnessed extensive trading around the 2098-2100 and 1700-1705 price range respectively.
The global markets were up on 20-7 and are up on 21-7 as well. Yet, SGX Nifty is trading at 15594. From my reading, it is under performing by 100-125+ points.
SGX Nifty is only an indication of the sentiment and not the only indicator. But if the difference remains, then there is something wrong with the domestic cues that are neither audible nor visible. Let us see what is in store on the last expiry with the lot size 75.


Thank you, and Happy Money Making!

Umesh
21-07-2021.

P.S. If you choose to comment on the above, please do so with your analytical view rather than merely passing a comment. Your presentation of the view held by you would help other readers as well.

NOTE:

This write-up is not a prediction mechanism for the movement of Indices in the Indian markets as the markets are unpredictable in nature. I may refer to many data points in the article but I do not base my view on any of these standalone. In fact, I prefer to react to the price moves than predict the price moves. I also do not review Open Interest. Whatever data points I am using, are all stated in the article. The article title, as well as its contents, can at best be stated as --- This Is How I Read Nifty . I hope I have been able to set the expectations right.

Comments

Comprehensive! Well analysed. Apart from data analysis, MACD and RSI, the indicators most people swear by are also indicating negative divergence, showing underlying weakness.
Reply
@sanketsudan, Thank you for the feedback. We have to see where Nifty ends the week. ABove the last Friday close or below that.
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