Today the market finally gave a dip after many days of a sustained up move. Now there would be downside targets that may dominate the minds of people. The question is whether the small trader, who was waiting for the market to dip, is brave enough to take advantage of this opportunity which seems to be a bit tricky!
National Stock Exchanges Nifty closed at 5,676, down 70.95 points or 1.23% from previous close and Bombay Stock Exchanges Sensex ended the session at 18,708.98, down 229.48 points or 1.21%.
Tracking Trade:
The market opened almost flat and started to drift down slowly. The intraday highs were registered right at the start. Nifty made a high of 5,751.85 and Sensex touched the level of 18,969.19. The market meandered in a narrow range till midday. The European markets opened and continued to trade in the red. This helped Indian equities to slide down to lower levels and finally end the session near the lows of the day. Nifty made a low of 5,666.20 and Sensex touched the level of 18,684.40. Nifty October Future closed with a premium of around 22 points.
Today the Nifty has turned weak. It traded and closed below Fridays close of 5,746.95. The massive rally that occurred in September now seems to be correcting. However, the index has strong supports at lower levels. Its 20 DMA is around 5,600 levels and the 38.2% Fibonacci retracement level for the rally from the low of September 5 (5,215.70) to the high of October 5 (5,815.35) is around the 5,590 levels. This support zone may act as support and buying may be expected around these levels.
Bank Nifty closed at 11,362.20, down 149.20 points or 1.30% from previous close. This index has also turned weak. Like the Nifty, Bank Nifty too closed below Fridays close of 11,511.40. The index has once again been pushed in the range of 11,320 and 11,540. However, even if the index breaks below this range, it has multiple supports at lower levels.
20 DMA for the Bank Nifty is around 11,000 levels and the 38.2% Fibonacci retracement level for the move from the low of September 5 (9,814.05) to the high of October 5 (11,745.20) is also around 11,000 level. It may act as support for this index and may also stop the Nifty from sliding down.
CNX IT closed at 6,207.95, down 84.5 points or 1.34% from previous close. All the three important indices traded on the NSE were equally weak today. CNX IT is clearly in a downtrend. Today was the second consecutive session when the index closed below its 20 DMA which is around 6,390 levels. However, the index has strong supports in close vicinity. 200 DMA for this index is around 6,140 levels and the 50 DMA is around 6,120 levels. Also the 50% Fibonacci retracement level for the move from the low of 5,460.70 which occurred on July 26 to the high of 6,643.80 which was registered on September 14 is around 6,050.
CNX IT has also corrected its overbought position and is approaching an oversold position on the momentum indicators. This setup should be closely watched by traders who are short on this index. It does not mean that CNX IT will start to rally on the upside but it does mean that there is limited downside and the southward movement may be sluggish.
India VIX closed at 17.17, up 2.32% from previous close. Today is the eighth consecutive session when the index has traded in the 1.70 point range of 15.60 to 17.30. Today is also the second consecutive session when the index has closed above its 20 DMA which is around 16.60 and also above its 50 DMA which is around 16.50 levels.
India VIX has also made a bullish pattern on the daily candlestick chart. However, the index is stuck in a range and no significant move may be expected till it trades within this range. This also reflects the complacency of market participants that they do not have an extreme view on the markets.
The broader markets closed in negative territory. The BSE Midcap Index closed with a loss of 0.44% and BSE Smallcap Index ended the session with a loss of 0.16%.
Out of the 13 sectoral indices traded on the BSE, only one closed in the green. The sole winner for the day was BSE Healthcare Index which closed with a gain of 1.20%. The losers include BSE Realty Index (-3.50%), BSE Oil & Gas Index (-2.77%), BSE Capital Goods Index (-2.70%), BSE Consumer Durable Index (-1.56%) and BSE IT Index (-1.40%).
The top five Sensex gainers for the day were Sun Pharma (3.67%), Bharti Airtel (1.62%), Cipla (0.87%), Jindal Steel (0.79%) and ITC (0.65%). The top five Sensex losers included Reliance Industries (-4.51%), Hindalco (-3.52%), BHEL (-3.44%), L&T (-3.09%) and SBI (-2.97%).
The market breadth closed on a negative note. Out of 3,013 stocks traded on the BSE, 1,383 advanced, 1,515 declined and 115 remained unchanged.
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