Nifty Daily Update: 16 Oct 2017. Strong start to the week.

Big Picture Oct 16th 

Another strong show by the bulls as Nifty opened above the previous high and traded through the day above Friday's close. It gained 63.40 points to close at 10230.85. The market breadth was negative with an advance to decline score of 0.88. The 52w HiLo score stood at 72% down from 79% on Friday.

The broad market indices all closed in the green with midcaps gaining the most at 0.73%. Amongst the sectoral indices, Metals and Pharma lead the gains while Fin Services and PSU banks closed in the red indicating weakening sentiment for the finance stocks.

All the new highs and bullish closes will continue to be life time highs for the Index. Accordingly the close of 10231 is a record closing and the high of the day 10242.95 is a record high, now a decent 64 points above the high in Sept. 

Candle Stick Analysis

• Today's candle has a very interesting formation. A small upper wick and a small body with a significant lower wick 50% of the day's range.
• The attempt by bulls to create another window (gap) at 10200 levels failed as bears managed to close this intraday itself. The bulls gapped up to open at 10207.4 to overcome any resistance around the 10200 psychological levels, the bears were successful enough to drag the day's low well into Friday's range sabotaging the bull camp's intent.
• A smaller upper wick and/or a slightly longer lower wick would have classified this as a classic hanging man pattern at the top of the chart and a point in Bear's favour. This was not to be. 
• The fact that the low of the day was above the Friday close instead became a  minor victory for the bulls.
• The constant selling by those calling the tops can be a fatal irritation for the rally. The bulls have to weed out or absorb such selling pressure in order to consolidate their hold on the market. 
• The 2017 H1 rally has seen a minimum gains of 400+ points from one top to the next, except from July, when the new peaks are only a few points above the July peak. The current peak is now about 100 points from the July peak.
• The candle is in unchartered territory making new highs both on a day's high and closing basis. 

Trend and Momentum Analysis

• Nifty is bullish as it is now trading above all key moving averages which are once again neatly aligned.
• The momentum as measured by RSI is also bullish. 

India Vix and Nifty Options Data

• The India Vix once again indicated bearish activity with a gain of 0.42% in the day's session.
• The PC Ratio was 1.699 (versus 1.603 on Friday) 
• The PC Volume was 1.13 with both calls and puts clocking more than 1.2 million units in the trading session.
• 10000 and 10200 are the support and resistance strike prices based on OI data.
• 10200 strike price saw significant action. The call side witnessed a short covering of 200K units while the put side saw a massive 2.198 million units of short buildup. 
• 10250 and 10300 puts also saw half a million units each of short build up indicating bullish sentiment on some of the put writers. 
• The 10000 strike saw a short covering of half a million units while there was not much of change in the put side.
• Overall there is a big battle going on between the bull and bear camps in the options market. 

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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.