Friday, day after the monthly expiry of November contract saw massive buying pulling nifty above 8100 during close. Nifty had started the week opening above 8000 but fell to as low as 7910 during the week testing the earlier low of 7920, expiry day as it generally pans out was extremely volatile with traders getting trapped on both sides of the short and long positions, but today such buying took everybody by surprise causing many short positions to cover thus propelling nifty even higher.
Though it can be still said, Nifty was unable to test its 200 DMA at 8150 due to lack of participation by the banking sector in the upmove still creating doubt over the longevity and stability of the ferocious rally.
Mostly all sectors had participated in the uptrend baring Autos and select Bank stocks.
Stand out sector was IT on weaker rupee/stronger dollar with most stocks gaining over 5%
Pharma stood second to IT in the large pullback.
Week on week, even with such volatile moves nifty managed to close in positive after long time.
It can be perceived that nifty still remains range bound between 8150-7900 levels, but a breakout on either side would cause a big move as nifty is in expansionary phase.
Being a Friday, a minor pullback was anticipated after a week long sell-off in mostly every sector, but a higher dollar index dismissed the hopes as market continued to see selling pressure on any intraday pullbacks.
Again a gap-up opening was instantly sold into dragging the index below 8100 levels, any tries to reach the 200 DMA was used to short. Index was in choppy waters throughout the day with even a 10-20 point rally being sold into closing at 8074 with a minor cut of 6 points.
Index tested the long term support of 8040 which was seen as a buying opportunity by many investors, while on the up side it managed to reach 8128 but failed to go above 8130 which now acted as a key resistance.
Most of the sectors were in the red excepting select pharma and bank names. Metals saw deep gashes on account of a higher dollar which was comfortably trading at 14 yr highs.
Metals and banks which was considered to be trading on a positive note a day back saw cuts firming a break down across all sectors caused due to domestic issue of demonetization and a higher dollar which is seen a a key negative for emerging markets.
Among metals on Hind Zinc saw a flat closing due to higher zinc prices on the commodities front and Sun Pharma was the clear leader in Pharma sector with more than 2% points uptick.
On Friday, Nifty lost over 200 points ending below 8300 while the sensex lost over 650 as risk off trades re-spurred. Most the the selling was majorly due to demonetization which the Government ensued just a day before U.S election result to curb black money.
Sectors which saw a good crack were IT , Financials, Auto, Oil and Gas, Consumer goods and Realty.
Pharma was again the top performing sector with Metals not falling much due to Trump’s policies over Infrastructure spends and Biotechnology.
Point to notice – Nifty again reversed from its 8600 levels from where the initial fall had started thus pointing that the expansionary movement is set to be on the down side. It failed to hold 8360 mark which was one of the crucial supports only broken intraday on the extremely volatile election day.
On such a down day , Pharma sector was still battling for the bulls, with metal stocks supporting by not falling much due to metal prices trading at high levels fueled by sentiments from the election result on the commodities front.
From above it can be perceived that a retest of 200 DMA near 8100 levels might be on the cards yet again after the unexpected global rally on the upside.
9th November , day of major political drama where Donald Trump was elected as President over Hilary Clinton taken to be totally surprising as polls indicated a clear Clinton win along with the pain coming from another big move by the Indian Prime Minister to curb black money.
Nifty futures indicated healthy cuts during pre-open as globally all the indices were down about 3-5% on the news that Trump was leading the electoral race.
On opening, cuts deepened enough to make the index nearly touch its 200 DMA. Early trading hrs were extremely volatile as the see saw-ing vote counts gave edges to both bulls and bears with the index covering 50% of its losses when the count showed Clinton ahead.
The short covering was led by value buying through DIIs and some bullish positions created by brave traders. Going ahead, picture was getting clearer about Trump winning which in turn impacted IT stocks and gave Pharma and Banking sectors a bit of relief thus averaging out the cuts allowing the index to keep its retraced position from the lows it made during the early hrs of trading.
Through the respective speeches by the candidates about their policies it was clear that a Trump win would benefit Pharma and pressure IT and with Clinton vice versa.
As the election counting headed for the last stage, it showed Trump winning not only the presidential post but Republicans clean sweeping the House and the Senate. Pharma led relief rally gained momentum with European markets opening with lesser cuts than what the futures were indicating earlier. Cuts lessened to 1/3rd from half with majority of index heavy weights along with bank names going into the positive due to incremental buying and short covering where the index finally closed.
In short, the early hiccup with a damaging downturn was converted into a mere 100 point cut during close but index failed to touch 8500 when it was trading in its highs closing below 8450 which can be perceived only as value investing and covering of short positions initiated at higher levels not a trend reversal as uncertainty still looms about how American markets will react later in the night.
FBI clearing Hilary Clinton sparked global rally, basically a broad relief rally as hopes of Clinton victory strengthens.Asia traded higher with India having a gap up opening above the crucial 8500 mark.
Nifty traded higher throughout the session on short covering but failed to take out 8550 on the upper side which could have changed the whole perception until last 30 mins where fresh shorts or selling pushed the index back below 8500 testing the support of 8480 finally closing at 8497.
After the large gap up , no incremental buying was visible which created doubts over the longevity and stability of the pullback.
Uncertain global scenario still maintains a cloud over the direction of the market with American election results due within 48 hrs which may create a knee jerk reaction on either side with large gaps.
America opened higher and extended gains aiding European Markets to have a strong closing.
This week nifty broke its contracting stint with a large gap down which was more or less anticipated as U.S elections garner the heat with the candidates going nearly head to head according to recent polls.
The gap down was followed by more incremental selling pushing the index to test its support signaled by the short term trend line which it held on week’s closing basis.
Coming week, a massive whirlpool of events might either push the index towards its 200 DMA or a significant pullback to its trading range which it was enjoying from past many days.