The BSE Sensex plunged over 700 points and Nifty declined over 200 points.Let me put the reason from both Technical and Fundamental Perceptive
1. Fundamental
- Liquidity Squeeze by FII’s : FII money is Hot money which chase return irrespective of market. The Hottest Stock market on earth right now is Chinese Stock Market which is running like there is no tomorrow. China’s securities regulator approved 30 new initial public offers (IPOs). FII withdrawing funds for investing in IPO in China. $175 billion of IPOs are lined up this week.
- Spike in Crude Prices: Oil hits 2015 highs jump 50% from 2014 Lows We are net importer of Crude Oil and Jump in crude oil prices will have negative impact on Indian Economy.
- Passage of crucial bills stuck in Parliament: GST and LAND BILL which would have shown Government is committed to reform and stuck in Upper House and patience is running out of investors. MAT issue has also dented the confidence of Global Investors .
2. Technical Reason
- Trading below 200 DMA: Nifty/ Sensex after 15 months are trading well below its 200 DMA, putting pressure on market, as many FII’s have 200 DMA benchmark for buying or selling.
- Gann Date Effect- As discussed in Weekly Analysis and Daily Analysis Gann/Appoint and Gunner plays an important role in finding impulsive move, all studies were pointing towards a big move.
- The fast fall we saw in Opening was was triggered by algorithmic trading platforms, As per Dealers Aberdeen Global has sold 13 Lacs Nifty Futures based on their algo program which lead to 159 points fall in matter of 20 mins.
Good points made regarding yesterday (Wednesday) fall. But this news item adds a new dimension to the whole analysis. It pertains to huge algorithmic trading – that is, the computers are fed in mathematical formulae for buy/sell trading levels, and then they just take over. If true, it is destabilising.
The news item says: “According to Bloomberg data, four large orders in Nifty May futures, ranging between 7,000 and 39,000 contracts, were traded between 9:41am and 9:53am. The deals were worth Rs 1,470 crore. This accentuated the correction in equity indices.”
http://economictimes.indiatimes.com/articleshow/47182772.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
bramesh ji from where you derive these news ? is there any source of real time news regarding share market ? please reply
I have my Bloomberg terminal
Rgds,
Bramesh
Don’t buy falling swords….Wait for nifty to settle down around 7900…..
Then go for bottom fishing.
for investors what level should be value buying?
Clients had initiated huge Long Index Calls positions, as well as Index Put Credit spreads this week. They had also reduced their ‘Short Index futures’ positions. FIIs have taken the other side of the trade, & purchased 2.3K worth of Long Index options (mostly Puts) which is why Nifty was pulled down by Aberdeen (?!?).
Hi Bramesh..
this correction is a curtain raiser of global correction..? ( any chance US & Europe earnings)
Biju
Well i wont accept your last point…if aberdeen global sells in nifty how sensex falls?…moreover nifty moves based on index weightage scripts…
Hi mahesh i dont think you are familiar with how trading works. If a big fund sells nifty futures then both nifty and sensex fall together as the underlyings are the same. You cant have the nifty down 2 percent and sensex down only 1 or vice versa. And to add further you mention index weightage for some reason. When a nifty futures is sold the underlying gets pressured as per specific weights. So obviously selling nifty futures affects the stocks. I suggest you do a little more study before investing as with what you just said i am afraid you might suffer losses going forward as your understanding of the markets isnt up to the mark.
Thanks Nikhil for apt and to the point views.
Rgds,
Bramesh
Nikhil,
If only Nifty Futures are sold and Nifty Stocks are not sold then only Nifty Spot does not go down Nifty Futures go into Discount.Yes But Heavy Selling of Futures Builds a Negative Sentiment. Nifty Futures cannot effect the Underlying Nifty Index.
Heavy selling of NF – 13 lakh contracts in a minute must be heavy I suppose.
Professional trading desk is different to that of retail. Sharp enough to analyse sentiment, immediate trend, and executes quicker than others, who end up chasing.
Sir you really need to do some research. I cant believe the things im reading. You are saying nifty futures and spot have no corelation? Unbelievable.
When Nifty Future falls, Arbitrage traders buy NF at low rate and at the same time (short) sell Nifty Index stocks, which are (for a few seconds) still at a higher price. This results in the index stocks also facing a sell off, resulting in index (both Sensex and Nifty) drop. The price balancing takes place very swiftly, so that more arbitrage traders can not jump in.
That’s just one of the many ways, Nifty Future controls its underlying.
Mr. Bramesh should correct me if I am wrong.
I trade in GBPINR only apart from stocks. Do u think parabolic SAR is a good indicator for intraday / scalp trading? Can u suggest good technical indicator/s for day trading that can be followed for day trading too identify point of inflection?
How do u get these news
at least i heard it on ET NOW & CNBC
Sir,
Do you see any value buying levels now for equities…