Is the market tiring out?
There is a saying: amateurs open the markets and professional close it. That clearly has been the case over last two days. On Monday, the markets opened gap down and closed at day‘s high.
November 07, 2013 / 10:31 IST
There is a saying: amateurs open the market and professionals close it. That clearly has been the case over last two days. On Monday, the markets opened gap down and closed at day's high. Those who would have taken long position at any time during the day would have made money and they would have made a killing if they kept positions open overnight since on Tuesday we had a big gap up.
And incredibly, anyone who would have shorted the gap yesterday would have made money through the day and with a likely gap down in the offing, a killing for them is also coming along. But did yesterday’s move change the market texture from "Buy on dips" to "Sell on rally"? May be too early to say that, but we do have some data points to ponder now.Nifty hit a high of 5982 and slipped nearly 50 points – the Bank Nifty hit a high of 10,450 and slipped 300 points from its highs. FII buying has been petering out as well and yesterday, they only bought around Rs 200 crore in cash markets. For me, 5982 on Nifty is now a massive resistance since today you will have a gap down. If the Nifty fails to conclusively break that, you may see bears coming back in the game. Also the fact that Bank Nifty topped out at gap yesterday would also worry the bulls.Of course, the bulls can also argue that the market is now adequately hedged. The Nifty futures premium is down from nearly 70 points to 30 points and the Put Call ratio is well under control with big Call writing at 6000-6300. However the Volatility index is showing signs of bottoming out and if that has to make another move towards 30, you may well kiss this uptrend goodbye. Keep in mind, this is a liquidity driven rally and liquidity can only support markets for a limited time. The market needs some fundamental triggers and it would be interesting if the earnings season provides that trigger. If there is appositive surprise, brace yourself for another surprise rally. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
