I have not written any post for the last 15 days as the markets were oscillating in a range. The bearish outlook I have outlined in my monthly commentary for the last two months has finally started taking shape.
I think the euphoria about the new NDA government is over. The budget was a non-event except for the higher taxation for super-rich people and FPIs. This led to some negativity in the sentiment on top of the worsening high-frequency macroeconomic data. The US/EU vs Iran tensions are slowly coming to a boiling point and any escalation can bring a sudden few 100 points of collapse.
Nifty Long Term
Last two weeks were eventful and we finally see some movement on the downside.
- Bearish Divergence at play.
- The uptrend line has been finally broken on Nifty after closing below 11500 on Friday.
- The RSI and PPO negative crossover are accelerating.
- 10750 – 11000 is the first strong support.
- 20 and 50 EMA crossover is just happening.
- RSI(7) has faced resistance @ 50 and turned down.
- PPO has given a negative crossover below the zero line.
- The 200 EMA should act as some kind of support ZONE.
Nifty Short Term
- The topping formation/distribution we have discussed in our earlier posts completed by the end of last week.
- This week had seen a pullback to the previous support area of 11650-1170 which has now turned into resistance.
- Nifty has sharply corrected from that zone with the breakdown from the bearish flag.
Do not rush into Buy. The market breadth (AD line) as I have explained in my earlier posts is negative for the last few months. It means very few stocks are holding the market up whereas the rest of the market has collapsed. Now as the FPIs are also joining the Bear party those few may also finally succumb to the selling pressure.
Read the monthly Bearish outlook post here –