The things are not matching. Meaning? Well, let me list those:
1) The covid cases and deaths are rising everyday. The situation is dire in almost all districts & states and lockdown is slowly getting imposed by various states and yet Nifty and banknifty are climbing everyday. Doesn’t make sense.
2) Since last 2 days Nifty and banknifty futures are trading at discount w.r.t. spot prices and yet both indices are giving substantial higher highs, higher lows and higher closing prices. Doesn’t make sense.
3) In the past, FII selling above 1100 crs ( in cash, equity) would have pulled Nifty down significantly and DII buying would be somewhere around half of that figure. But since last 4 days (except today) FIIs sold heftily, DIIs bought almost matching amount but markets peaked, meaning DIIs bought Nifty heavy stocks and FIIs sold not so nifty heavy stocks. FIIs are not known to deal in mid- caps and small caps much, so that also doesn’t make sense.
Only today, I felt the rise in Nifty and Banknifty was justified, but only according to charts, because both closed with good bullish green candle above their mid line of Bollinger Bands yesterday.
FIIs and DIIs both bought today in Equity. FIIs bought both in index as well as stock futures too. This seems to imply that all lockdowns are already priced in! Seriously? Can that happen? I am thinking differently. Watching charts closely, yesterday and today, one can see that there is absence of any big instantaneous move ( up or down both) whereas in past 100 points move in Nifty had become very common. Similarly 500-600 point move in Banknifty was also very common and it could happen twice or thrice in one day. No such move was visible in last 3-4 days. Why? So I come to conclude that every minor sell-off was met with slightly major buy-out. In other words, every sell-off by FIIs was countered by DII buyout. Again, can that happen? Yes it can. There is a term called ‘index management’ for that. But then why DIIs are buying? Another instance comes to my mind- 9/11 in US! After 9/11 bombing of twin towers it was perceived that rest of the world might think that US supremacy is diminishing and to counter that, US govt appealed to its financial institutions to support its fight against terrorism and not go into sell-off mode and in fact try to absorb the sell off, if any, by foreign institutions. And they did support marvellously. Can something similar happen here too? Can govt ask its own institutions (LIC- the biggest, SBI, etc.) to not sell and in fact get on buying spree to combat FII selling because of Covid crisis? Well in my opinion it can happen but whether it is happening or not I wouldn’t know. So now the million dollar question- what should we do? In such cases fall will come when the purpose is solved and when people are expecting the least. So for now, markets may continue to rise but as soon as it is seen that Covid cases are coming under control and slightest trigger ( global or local, whatever) is experienced- markets will start to fall and mighty fall it will be. So hedge your trades, take both-side trades.
Stay safe, stay at home, stay healthy… this too shall pass.
1) The covid cases and deaths are rising everyday. The situation is dire in almost all districts & states and lockdown is slowly getting imposed by various states and yet Nifty and banknifty are climbing everyday. Doesn’t make sense.
2) Since last 2 days Nifty and banknifty futures are trading at discount w.r.t. spot prices and yet both indices are giving substantial higher highs, higher lows and higher closing prices. Doesn’t make sense.
3) In the past, FII selling above 1100 crs ( in cash, equity) would have pulled Nifty down significantly and DII buying would be somewhere around half of that figure. But since last 4 days (except today) FIIs sold heftily, DIIs bought almost matching amount but markets peaked, meaning DIIs bought Nifty heavy stocks and FIIs sold not so nifty heavy stocks. FIIs are not known to deal in mid- caps and small caps much, so that also doesn’t make sense.
Only today, I felt the rise in Nifty and Banknifty was justified, but only according to charts, because both closed with good bullish green candle above their mid line of Bollinger Bands yesterday.
FIIs and DIIs both bought today in Equity. FIIs bought both in index as well as stock futures too. This seems to imply that all lockdowns are already priced in! Seriously? Can that happen? I am thinking differently. Watching charts closely, yesterday and today, one can see that there is absence of any big instantaneous move ( up or down both) whereas in past 100 points move in Nifty had become very common. Similarly 500-600 point move in Banknifty was also very common and it could happen twice or thrice in one day. No such move was visible in last 3-4 days. Why? So I come to conclude that every minor sell-off was met with slightly major buy-out. In other words, every sell-off by FIIs was countered by DII buyout. Again, can that happen? Yes it can. There is a term called ‘index management’ for that. But then why DIIs are buying? Another instance comes to my mind- 9/11 in US! After 9/11 bombing of twin towers it was perceived that rest of the world might think that US supremacy is diminishing and to counter that, US govt appealed to its financial institutions to support its fight against terrorism and not go into sell-off mode and in fact try to absorb the sell off, if any, by foreign institutions. And they did support marvellously. Can something similar happen here too? Can govt ask its own institutions (LIC- the biggest, SBI, etc.) to not sell and in fact get on buying spree to combat FII selling because of Covid crisis? Well in my opinion it can happen but whether it is happening or not I wouldn’t know. So now the million dollar question- what should we do? In such cases fall will come when the purpose is solved and when people are expecting the least. So for now, markets may continue to rise but as soon as it is seen that Covid cases are coming under control and slightest trigger ( global or local, whatever) is experienced- markets will start to fall and mighty fall it will be. So hedge your trades, take both-side trades.
Stay safe, stay at home, stay healthy… this too shall pass.