Nifty Daily Update 11 Oct 2017. Smart Money Traps the Guillable ??

Big Picture Oct 11th

The Nifty lost 32 points in today's trading session. Look at the NSE Chart that tracks the day's movement in the Index. As mentioned in my blog yesterday, the whole day seemed bullish and trading above 10K to lure the guillable traders only to trap them and take the index down in the last few minutes. 



The broad market indices all ended the day in red and within the sectors only IT managed to stay green while the rest bled. Small Cap Index was the top loser among market indices while PSU Banks took the beating within the Sectors.

The advance decline ratio fell sharply from 1.45 to 0.44 while the 52W High/Low ratio improved slightly from 81.54% to 83.97%.


Candle Stick Analysis

  • Today saw a bearish engulfing 2 candle pattern. To be fair, the two doji's had given more than sufficient warning for those who were watchful, as I did mention in my blog yesterday.
  • The Japanese who are known for their military analogy would have termed this the evening raid, as huge selling pressure started towards the close of the session. The popular term is night attack however, that would have been a more massive selling in the last 30 minutes or so. However, as the NSE picture shows, the raid (selling) started from around 1 PM and lasted 2+ hours till the close. Presumably a lot of weak hands and stop losses taken out of the market. 
  • Volumes were close to the 14 day average turnover indicating selling by smart money. A down day with average volumes would typically indicate the start of a sell-off at least for the short term. However a confirmation would be required tomorrow.
  • The range for the day was 112 points versus 32 points yesterday. The real body was 67% of the day's range. It is indeed a strongly bearish candle.

Trend and Momentum Analysis

  • Nifty still shows strength as it closed above all key moving averages.
  • Momentum (RSI) has slowed by 2 points and is neutral with bullish bias. 

India Vix and Nifty Options Data

  • The PCR declined to 1.09 from 1.14 indicating a journey towards neutrality in the options market
  • The India Vix showed bearish activity with a put to call volume of 1.36. The India Vix increased by 5.56%
  • 9800 and 10000 continue to be support and resistance strike prices based on Outstanding OI
  • 10000 strike price saw highly bearish activity as there was a short build up of about 0.5 million calls and long build up of 0.8 million of puts.
  • OTM Puts upto 9700 saw short covering indicating further downside before expiry.
  • ITM Calls from 9700 to 9950 saw long unwinding reinforcing the bearish sentiment

Outlook for next trading session

Nifty Range for 12 Oct is 9915 to 10024 with support at 9881 and resistance at 10100
Bank Nifty Range for 12 Oct is 23861 to 24255 with support at 23762 and resistance at 24550

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This blog is for educational and awareness purpose only. The views are intended for discussion and exchange of views rather than an expert opinion. This is not an recommendation to buy or sell or invest in the stock market and derivatives market. Kindly exercise caution and perform your own due diligence before investing in the market, after fully and clearly understanding the risks involved.

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