Sell-off intensifies on D-Street; Nifty witnesses long unwind, Bank Nifty sees short built-up
Market Update at 12:50 PM: The selling pressure in the Indian markets exuberated during Wednesday's afternoon session with Nifty tumbling by more than 100 points while Sensex plunging over 300 points.
Reliance Industries and HDFC twins have combinedly contributed more than 50 points.
The sell-off is not just restricted to the large-cap, but it's broad-based; hence, Nifty Midcap 100 and Smallcap is also down by 0.92 per cent and 0.52 per cent, respectively. Market breadth is in the favour of the declines.
Among the sectoral indices, barring Nifty FMCG and Nifty IT, all other sectoral indices were down in the range of 0.39 per cent to 2.24 per cent. Bank Nifty has witnessed a short built-up. Furthermore, the banking sectors show most of the declines in the future segment.
Market Update at 10:00 AM: Indian markets witnessed some profit booking in the early deals today. Sensex and Nifty are down by a quarter of a per cent. Meanwhile, a divergent trend was seen in the broader markets with Nifty Midcap 100 being down by half a per cent. On the other hand, Nifty Smallcap remained almost unchanged.
On the sectoral front, barring Nifty FMCG and Nifty PSU Bank, all other indices were trading in red, led by Nifty Metal and Nifty Auto.
Among stock-specific action, BASF India Ltd jumped 7 per cent while Jubilant FoodWorks gained nearly 4 per cent after witnessing over a threefold jump in its net profit in Q4. Besides, JK Tyre surged 3 per cent and also, logged a fresh 52-week high.
Nifty opened the session with a gap-up on Tuesday and it went onto touch an intraday record high of 15,901.6 levels. Thereafter, it spent the entire session in a capped range without making any directional move on either side. In the end, Nifty settled at 15,869.25. The broader markets too witnessed healthy buying interest as both Nifty Mid-cap and Small-cap ended higher by 0.61 per cent and 0.45 per cent, respectively.
The price action of the day has formed a pattern, which resembles Doji as the opening & closing of the session, was almost identical. Interestingly, in the last three trading sessions, we have observed a formation of Doji pattern as of June 11, followed by a hanging man pattern on Monday while again a Doji pattern on Tuesday. So, the formation of an indecisive candle for the third successive day at an all-time high clearly indicates exhaustion.
Going ahead, the immediate support for the index is seen at levels of 15,820, followed by 15,770 levels. On the upside, the level of 15,900-15,950 is likely to act as a resistance level.
The 14-day RSI shows negative divergence as Nifty made a new high but RSI did not make a fresh 14-period high while the daily MACD trades above the signal line, which is bullish. However, a narrowing histogram suggests a deceleration in the momentum.
Overall, the signs of exhaustion are clearly visible on the chart but as long as Nifty does not close below the prior bar low, traders are advised not to initiate a counter-trend trade.