The corporate rate cuts have polarised the stock market and had resulted in more bad outcomes for the market breadth. In all, five index companies (Reliance, HDFC Bank, Bajaj Finance, Hindustan Unilever & Bharat Petroleum) account for a little more than half the gains (53 percent) in the broader market since September 19 and 91 percent of the gain in market cap has come from 13 top stocks.
- The 20/50/200 EMAs bullish crossover has failed and Nifty is at the breakout point of 11150.
- The bullish Flag has failed and normally such failures have big bearish repercussions.
- All the oscillators have reversed from the overbought zones.
- The possibility of a breakdown below 11150 and a dash towards 10700 is high.
Nifty Long Term
- The last month’s bullish surge on the back of the tax cuts now looks like a Bear market pullback.
- Both RSI and Nifty has made a lower HIGH and Nifty has reversed exactly from the bearish trendline.
- Bearish RSI crossover happened at the end of the last week.
- RSI2 has become overbought on the pullback and supports the thesis of Bear market rally.
- The biggest negative I think is the bearish continuation of the PPO just below the zero line.
Expect at least 10700 in the near term.
- Retest and failure at the breakdown trendline.
- Supports the lower Top theory.
- Lower prices are expected.