Nifty in red: Broader markets bleed red; India VIX jumps 7 per cent!
Market Update at 12:15 PM: Suddenly, the celebration on D-Street has taken a U-turn and the phase of greed seemed to pave the way for fear as Nifty declined nearly 180 points from the day’s high. It's currently trading in negative terrain with a loss of 16 points. The breadth of Nifty is so weak that only 18 stocks were seen trading in the green as compared to 32 stocks in the red.
Among the sectoral indices, barring Nifty Financial Services, which has added 0.28 per cent, all other indices were in red with Nifty PSU Bank & Metal emerging as the top losers.
The broader market indices were bleeding red as Nifty Midcap and Smallcap plunged over 1 per cent each
The Indian markets continued from where they had left on Wednesday. And with this, Nifty index logged back-to-back centuries on Thursday. Nifty closed at 17,629.50 with 110 points gain.
The cabinet approval of the bad bank proposal has boosted the market sentiment, enabling it to close at another record high. The stocks of the banking, financial services & insurance (BFSI) sector led the market on Thursday.
Nifty PSU Bank jumped 5.43 per cent, followed by Nifty Bank, which gained 2.22 per cent. Interestingly, India VIX also shot up by nearly 5 per cent. Though the market has reached a record high, the market breadth was negative.
After breaking out of the consolidation pattern, Nifty registered three consecutive new lifetime highs during the last four trading sessions. On an hourly chart, it has almost met the cup breakout target. Once again, it has been proven that the tight range breakouts will result in a faster retracement. It gained nearly 240 points in just two days. The overbought is just a condition and not a bearish sign. The RSI is inching close to the 80-mark even in the weekly chart. Historically, all the tops were made when the weekly RSI reached 80 or a little above.
Now, the visible target is just another hundred points. With the leading indicator reaching an extreme overbought condition, it is better to be cautiously optimistic. Maintain a strict stop-loss to protect the profits. As we already have the upside target of 17,740, let us examine the possible downside targets. The first rule of stop-loss in a strong bullish trend is a close below the prior bar low. Thursday's low of 17,510 is the first stop-loss. A move below 17,510 will give the first sign of weakness. It will give bearish signals only if it closes below the level of 17,343-250. The 8-EMA is currently at 17,404. These are the levels to be watched out for and maintain the stop-losses according to the individual risk appetite. However, there are no bearish indications as the price is making higher highs.