06 Sep 2024 — Nifty loses 380 pts, will the Bear attack start now?
Nifty Stance Neutral ➡️
Nifty has only fallen 379.95pts ~ 1.5% this week and it is pretty early to go bearish, but the structure gives a lot of hope for a bear attack. You all might agree that we are in an overvalued territory, even if we fall 20%, we might still be overvalued.
If you look at the daily candle, a strong double top is forming. For conclusive evidence, the markets have to trade below 24086, which is 3.2% lower than the current levels.
US markets fell last week and have a better-looking double top than ours. Again for conclusive evidence, we may need SPX to trade below 5137 which is like 5% below current levels.
I am maintaining a neutral stance and would like to go short if 24537 is getting taken out next week. Personally, I do not see us dropping below 24200 this week (I have short positions @ 24200 PE and may have to run for cover if we test those levels by Tuesday).
BankNifty Stance Neutral ➡️
BankNifty has lost only 694pts ~ 1.35% over the last week and interestingly 896pts drop came on Friday, 6th Sep. Our stance has been neutral for quite some time now and prefer to stay neutral until 49728 is not getting taken out.
The daily candle of BN is quite different than Nifty. BN did not even retrace the top that it made on 4th July, whereas Nifty had gone past that level. Honestly, there is something that is bothering the banks. The news that the deposit growth is slowing could be one reason. My opinion is that our deposit rates are much higher and were raised much lower proportionately than in the US. At 6.5%, the repo rate is no longer attractive and is seducing the depositors to withdraw and park in riskier asset classes like Mutual funds.
Then there is the news from what is happening in SEBI. The employees are protesting demanding better working conditions and obviously, the highlight is the corruption allegations of the SEBI Chief.
https://economictimes.indiatimes.com/markets/stocks/news/sebi-employees-protest-outside-hq-seek-boss-madhabi-puri-buchs-resignation/articleshow/113089808.cms?from=mdrhttps://economictimes.indiatimes.com/markets/stocks/news/sebi-employees-protest-outside-hq-seek-boss-madhabi-puri-buchs-resignation/articleshow/113089808.cms?from=mdrhttps://economictimes.indiatimes.com/markets/stocks/news/sebi-employees-protest-outside-hq-seek-boss-madhabi-puri-buchs-resignation/articleshow/113089808.cms?from=mdr
The problem is that such allegations even if not true will impact the credibility of the Indian equity ecosystem, especially from a foreign investor point of view. If the allegations are true, then many companies will face the heat and among that, the biggest losers will be banks.
Any company that has pledged its shares with the banks and if it is taken down, will drag the banks along with it. With dropping prices, the companies may face margin calls and banks will bear the heat. The main reason banks are reluctant to go up could be due to this reason.
The first main support comes at 48947 and I hope we do not go there this week itself.
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https://economictimes.indiatimes.com/markets/stocks/news/sebi-employees-protest-outside-hq-seek-boss-madhabi-puri-buchs-resignation/articleshow/113089808.cms?from=mdrhttps://economictimes.indiatimes.com/markets/stocks/news/sebi-employees-protest-outside-hq-seek-boss-madhabi-puri-buchs-resignation/articleshow/113089808.cms?from=mdr