"I am worried about the market mood, not just because of the rise in VIX but because of a larger issue," Milan Vaishnav, CMT, MSTA, founder of Gemstone Equity Research & Advisory Services said in an interview to Moneycontrol. India VIX, the fear index, jumped 63 percent in the past 8 sessions.
The history indicates that whenever the Nifty and VIX rising in the same direction, VIX has often ended up acting as a type of lead indicator for any impending move, he feels.
He believes the Nifty Realty index is not yet overbought on the charts. "We may see the uptrend intact in this index at least as of now. There are signs of some renewed momentum in the space," said Milan who spent nearly two decades in the capital markets.
Are you worried about the market mood given the sharp increase in India VIX?
Yes. I am worried. And my worry is not just because of the rise in the VIX but because of a larger issue. Generally, the Nifty and VIX share an inverse relationship. However, over the past few days, we have seen both Nifty and VIX rising simultaneously. This is absolutely unhealthy.
If we look at the historical instances, whenever the Nifty and VIX rising in the same direction, VIX has often ended up acting as a type of lead indicator for any impending move. Such instances have seen VIX acting as a precursor or a fore-warning of the creation of at least an intermediate top or a disruption of the primary trend.
Are the charts pointing out some revival in the Nifty FMCG index?
Of course yes. First of all, the Nifty FMCG Index was in a sideways trajectory. It took multiple support at its 200-DMA which is currently placed at 53,388. I expect that this level will stay defended.
Secondly, I also expect the markets in general to get a bit defensive. This is evident as the FMCG Index is seen sharply improving its relative momentum against the broader markets and this will result in an improved relative performance of this index.
Is the Nifty Realty index looking overbought at current levels?
It is not yet overbought on the charts. It has hit a fresh 52-week high following classical consolidation. We may see the uptrend intact in this index at least as of now. There are signs of some renewed momentum in this space.
Do you see the rally continuing in ABB India and Siemens as both now traded at new highs?
The rally began in ABB after the stock took support at 100DMA multiple times in February this year. Presently the rally stays firmly in place. So is the case with Siemens. The stock is in a steady uptrend and is seen moving higher forming higher tops and higher bottoms.
In the case of both of these stocks, investors should continue to stay invested and trail their stop-losses higher in the manner that if they have to exit, at least 70 percent of the peak profits should stay protected.
After reading weekly and monthly charts, do you expect the rally to continue in Godrej Properties?
On the higher time-frame charts, Godrej Properties has taken out a classical Double-Top resistance as it crossed above Rs 2,600. On the monthly timeframe charts, the stock remains mildly overbought.
If we take a cumulative look at the technical charts, one can fairly say that the stock has dragged its support levels higher at Rs 2,600; any consolidation or mild corrective retracements must find support at this level. So long as the stock stays above Rs 2,600, there are possibilities of the uptrend getting extended.
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