1. As on 10.11.2017, the long term moving averages stand as below: 50 DMA @ 10106, 100 DMA @ 9963, 200 DMA @ 9559. The longer term averages, thus still remain POSITIVELY aligned.
2. On the Index Futures side, there is a huge reduction in OI on the part of both the major stake holders. FIIs have reduced the stake in Index LONGS with (+19.7k vs +85.5k contracts a week earlier). The RETAIL side too seems to have lightened their positions, with SHORTS placed @ (-26.5k vs –63.8k contracts a week earlier).
3. The INDIA VIX has shot through the roof. The index moved up by a good 13.2% @ 13.48 vs 11.91, a week earlier. This brings us to a CAUTION zone on the backdrop of NIFTY correcting after hitting all time HIGHS in the week under consideration.
4. The market although rocketed onto a NEW ALL-TIME HIGH, has failed to sustain a confirmation to the BREAKOUT of sorts from the earlier week. 5. Subsequently, Index traded choppy witnessing swings on both the sides and ended with formation of “BEARISH ENGULFING” candle on the WEEKLY time frame.
Inference & Expectations:
• The index although broke below the BREAKOUT Gap-UP of earlier week (Gap-Up created on 01.11.2017 between 10390-10335); has been able to hold onto an earlier safety net between 10207-10321 (Gap-Up created on 25.10.2017).
• The index continues to consolidate with some base formation seen around 10240 levels (Bullish gap levels). Going ahead we sense the range bound move to continue within 10240 and 10380 levels, with a DOWNWARD extension happening even till 10180-10120.
• On the contrary, the ENGULFING BEAR candles of last 3 days may fizzle out if NIFTY trades above the 10420-10450 mark convincingly. A bit above that, the level of 10500 stands entrenched as a barrier potential for any BULL move from here on.
• The bias, thus, remains NEGATIVE in the short term, however one should avoid holding aggressive short positions as the higher volatility (as demarked by INDIA VIX) would be the flavor of the week.
• Only when the clarity emerges, would one look at BUILDING positions to the zest.
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