Fall in markets amplify heavy short built-up in index futures; 168 stocks slump over 5 per cent
Update: Indian markets extended their losses on Monday and were seen trading down by about 3.5 per cent. Short built-up was seen on Nifty, Bank Nifty, and Fin Nifty Futures, which were down by 3.59 per cent, 5.45 per cent, and 4.57 per cent, respectively while open interest went up by 4.61 per cent, 21.40 per cent, and 15.70 per cent, respectively.
Amongst the stock-specific action in the futures segment, RBL Bank, Indiabulls Housing Finance, M&M Fin, and AU Bank emerged as the top losers. In the gainers' list, Cipla and Dr Reddy’s were right at the top.
An interesting observation in today’s trading session is that in Nifty 500 index, there are as many as 168 stocks that have seen a fall of more than 5 per cent whereas, on the flip side, there were only two stocks that have gained more than 5 per cent.
Global Cues: Dow Jones Futures was down by 0.30 per cent while Nasdaq Futures was down by 0.19 per cent.
Update: The domestic benchmark indices faced a massive sell-off during the initial hour of the trade with Sensex down by nearly 1,250 points and Nifty down by around 400 points.
The reason for this catastrophe in the Indian markets is due to the massive surge in the COVID-19 cases in the last 24 hours. The broader indices too have witnessed severe fall as both Nifty Mid-cap and Small-cap were down by over 4 per cent.
Meanwhile, barring Nifty Pharma all the sectoral indices are in red with Nifty PSU Bank and Nifty Realty being the worst impacted. India VIX has jumped nearly 12 per cent and is trading above the 22 mark.
Besides, 20 stocks have made a new 52-week low on NSE.
The week gone by started on a turbulent note and thereafter, the bulls’ camp regrouped their act and was on a task to surpass the sturdy wall of resistance, which was placed at 14,885 levels.
The attempt to cross the resistance was successful on an intraday basis as Nifty, after crossing the hurdle of 14,885, speedily reached near the 15,000 mark. However, the level of 15,000 looked so near yet so far as Nifty lost almost 150 points from the high point of the day on Thursday and even on the last day of the week, the attempt to close above the 14,885 failed. In the end, Nifty ended the week with a modest loss of 0.22 per cent.
Nifty made a small bearish candle on the daily chart on Friday as its closing was lower than the opening level. Moreover, the range of the day was around 133 points, which is the lowest in the last seven trading sessions, and as a result, it has formed an NR7 bar. Further, there is an interesting pattern formation if we combine the last two trading sessions' bars, the pattern is known as 2BNR i.e., 2 bar narrow range.
The 2 bar NR represents a condensation of the market concept called congestion or contraction. As we know, markets keep changing their nature of movement regularly i.e. from a trending phase to a period of rest and back to a period of trend. This interchange between the phases of motion and rest is constantly taking place with one phase directly responsible for the other’s existence. So, the formation of this pattern clearly indicates that the stage is set for the phase of motion after a period of rest.
In the coming week, the immediate level of support is at 14,770 and a move below this level could trigger an extended correction towards the 14,650 levels. Meanwhile, a decisive close above 14,900 would give an advantage to the bulls.
The coming week could be a decisive week in determining the direction of the markets, which have lately trading in a sideways, owing to a host of factors that are likely to unfold including macroeconomic data and corporate earnings of IT majors such as TCS, Infosys and Wipro.