Is it time to be cautious on NIFTY?

Some conflicting signals:

India VIX has been closing below 20(good sign), occasionally giving a spike scare then abating within the session.

Not much buying seen from FIIs/DIIs. In fact the FIIs sold 660Cr and DIIs bought only 112Cr. Yet market closed marginally in green. Is the market being kept afloat for a while?

The RSI divergence can be easily noticed on the charts.
The NIFTY Futures relative strength against NIFTY has been in a constant decline for four sessions.

Nifty is forming a Rounding bottom pattern, but the volumes have been on a continuous decline. (Ideally the volumes should expand while the price approaches the breakout point.)

The leading sectors (Metals, Pharma , IT) are not really moving ( market breadth wise).
We are seeing a lot of failed breakouts. A hard penny environment. The NIFTY looks like a stronger index vis-a-vis S&P500 on Relative Strength . But are we really seeing strength in the broader market?

Comment: Note: I'm not a SEBI registered advisor. Please use discretion and consult your financial advisor.


I completely echo your views. The first half of this month looked promising but since a week, the technicals and fundamentals not correlating.
+1 Reply
raavigeorgian Minhaj_AK
@Minhaj_AK, That's true man. From 2018 to 2020 NIFTY had been deceptive in correlating with the broader market breadth. So, I have come to trust my SL more than anything. The moment most of my SLs start hitting, no matter how high the NIFTY is scaling, for me it's time to get out or stay 20-30% invested and watch the action unfold from the sidelines.
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