Things to consider while trading today 30/09/2021 by Master V
Updated: Oct 1, 2021
After a small correction, we have seen a good recovery in yesterday's session and closed with 37 points lower. If you have seen NSE volume was higher than avg after Sebi new rule implementation.
In my opinion, it is a temporary halt on upside momentum. If you look at sectoral indices Power, Metal and reality this three-sector has contributed the most and contradictory banks, auto, FMCG are the three-sector which has contributed on the downside.
Based on few traders I have interacted with short term view trend should be flat to negative due to a few of the reasons like inflation, bond yields, dollar index and crude prices. I don't see any selling pressure, especially in the index. In recent times whenever It goes toward support it takes to support and gives a sharp bounce.
If we look at nifty VIX (It is a volatility index directly connected with stock options prices and it indicates near future volatility and its effect can last up to 30 days or 20 trading sessions). We have seen the last few months avg was around 13 now it has shot up to level 19.11. For many analysts it's signed on correction if you see historical data whenever Vix shot up we see a correction and if vix is too high we have seen major correction to fall.
We have seen a rise in US yields and Brend crude oil (India imports and US exports crude) that pushed Usd Inr towards 74.4. Currently traded at 74.25 and if USD INR will cross 75 mark we can see a good correction in the manufacturing sector and increase retail inflation as we import everything from the china, Saudi, UAE, Iraq, Iran, Germany etc.
The global bond market is facing the worst month of 2021 and US and England Central banks have agreed to put pressure on short term borrowing costs due to inflation fears but most of the analysts are not believing this will end up in interest rate hike sooner as they think china crisis has short term effect and may bounce back.
Let's have one look towards global Indices as well
Let's talk about Dow jones it is showing some weakness due to Congress Confronts Huge Deadlines, and we have seen a good fall in Nasdaq as well fall of 2.7% in a day as we have seen a sharp bounce in bond yields. Us treasury yield is now at 18 Month highs.
As per many analysts when yield raises sharply it breaks the high growth (short term overvalued) stocks which are deepened on future's earnings e.g. service sectors, tech product companies.
Let's have a look at Dax as few traders believe it is somehow connected with nifty. Recently it has seen the biggest face of life in 33 years due to turmoil.
Here comes our FII DII data
Let's have a look at the biggest trigger in the market. Yes, you have guessed right power shortage in China. Due to china power shortage shot up the price of commodities.
Evergrande crisis will keep on haunting China going forward. If we see China as the largest producer, consumer and exporter of most of the commodities if going forward we see an imbalance in its cycle it will affect the world.
Due to the unofficial ban on imports from Australian coal, we have seen coal prices are boosting more than double in past one year. One of the reasons why coal India and coal companies stock prices around the globe boosted a lot recently.
Few of the analysts also talked about the direct impact on metal prices e.g. Morgan Stanley estimated aluminium production has been impacted by 7% due to power issues.
Now Let's talk about the Most favourite index of traders Nifty Bank
As per moving, averages nifty bank is bullish and Price action shows weakness in the nifty bank. Resistance on the upside will be 37980, 38240 and 38680.
Due to news on ties-up with three NBFCs and MFs. PSU privatization and demand revival and positive growth expectation by SBI chairman plus loan write of nearly 5 Billion $. gives confidence to its investor and we have seen a good bounce in SBI from lower levels.
We have seen weakness in top private banks including Hdfc, ICICI and axis bank over asset quality and future growth.
Now Let's talk about the biggest index of the Indian market Nifty50
As per technical data, nifty is short mid and long term bullish reason being the above 50, 100 and 200 moving averages.
RSI level is at 68 indicates bullish plus slightly overbought. Macd bullish crossover again indicating bullishness. Williamson%R is at -36 again same indicating bullish.
Resistance 17800, 17880 and 17960 and Support at 17620,17530 and 17460.
The sector of the day is PSU Bank due to news of 5 Billion $. Write off and Piramal Enterprises acquires DHFL for Rs 34,250 cr. Pump and Dump might be possible due to high NPAs.