F&O Talk | Nifty crucally down for its 50-week EMA straight week: Sudip Shah of SBI Securities

The Indian markets ended on Friday with the Deep Tanda Cut while Kovid recorded the worst closure of February. This was reduced by selling pressure throughout the board, though IT and auto stocks are more prominent. While the Nifty closed at 420.35 points or 1.86% at 22,124.70, the 30-Stock S&P BSE Sensex ended at 73,198.10, which was reduced by 1414.33 points or 1.90%.

Deputy Vice President of SBI Securities and Head of Technology and Derivatives Research Sudeep Shah interacted next week’s index strategy with Sudeep Shah, a view on the Nifty and Bank Nifty. The quotes edited from its chat are as follows:

Q. Post a 700-point reduction in the Nifty, do you think we’re close to the bottom?

The benchmark index, the Nifty, ended in the red for the fifth consecutive month, marking its longest row since November 1996. The sale of this reduced recession is a constant pressure pressure. In February alone, the index was down by about 6 percent. Meanwhile, it saw a sharp monthly improvement after the Kovid -19 crashed in the wider market, with the Nifty Midcap 100 and the Nifty Small Cap 100 sinking 10.79 and 13.07 percent, respectively.

On the technical front, the Nifty is trading decisively under its 50-week EMA in the third straight week, strengthening the bearish sentiment. In addition, both EMAs of 20 and 50-week have started to decline. While the OPE drop above 100 and 200-week EMAS has slowed down significantly, reflecting the reduction of long-term power.

Momentum indicators presents a mixed picture. The Daily RSI is currently around 22, indicating that the index is approaching the oversold region based on the RSI range shift rules. This can lead to a temporary break in selling pressure in the next few sessions; However, there is a need to confirm the pause by the price action.

Talking about crucial levels, a zone of 22,000-21,900 will act as a crucial support for the index as it is a confluence of 100-week EMA and 32.8 percent of the Fibonacci retraction level, which is 26,277 levels of its pre-end rally at 15,191. If the index slips below the level of 21,900, the next critical support is placed on the 21600 level. However, on the sidewalk, the zone of 22,650-22,700 will act as a crucial barrier to the index.

Q. With the Nifty’s monthly termination, what does the rollover data indicate for the March series?

For the fifth consecutive series, the Nifty futures ended in red, which marks the longest row in recent history. In the February series, the futures of index decreased by about 4%. Meanwhile, the Nifty Futures Rollover Elevated was stood at 83.57%, which was 80.77%of the last month and 80.67%of the three -month average.

Continuous weakness, together with a strong rollover indicates that the bearish spirit remains strong, in which traders move short positions. This indicates a cautious outlook for the upcoming range, as the market struggles to find a definite step in the midst of sales pressure.

Last month, the number of shares rolled in comparison to 181 lakh was 176 lakh. However, the cost of the rollover was 0.60%, which is below 0.70%of the three -month average, showing a relatively low premium.

Q. The bank Nifty is overturned for a few sessions. What is your vote on banking index and key levels?

Banking benchmark index, bank Nifty, is demonstrating the relevant strength compared to the frontline indices. While the Nifty has dropped 15.80% from its all-time high, the bank Nifty has decreased by only 11.23%, which illuminates its influence in the current market scenario.

Despite this elasticity, Bank Nifty is currently trading down both its short and long-term moving average, which is tendency downwards-a sign of underlying weakness. However, on the velocity front, the daily RSI remains in the side zone according to the RSI range shift rules, indicating the phase of consolidation rather than clarity. The crucial move in both directions can set the tone for the incoming sessions.

Going forward, the zone of 47700-47500 will act as a crucial support for the index as the previous swing law and 100-week EMA are placed in the region. However, on the sidewalk, the zone of 48800-48900 will act as an immediate barrier to the index.

Q. Any field based on rollover data?

Possible outperforming sectors based on roll-over data: private banks, financial services and metal

Possible underperforming fields based on roll-over data: Automobile, FMCG, IT, Pharma, Healthcare, Oil & Gas, PSU Banks, PSE and Realty

Q. What are your views on midcap and smallcap indicators and are we getting closer to a major support zone?

In February, the Nifty Midcap and the Nifty are a correction witness after the Covid -19 fall in the small cap 100 indicators. On a monthly basis, both have made a large bearish candle.

Most notable, the Nifty Midcap 100 index slid below its 100-week EMA level after August 2020. However, the Nifty Small Cap 100 Index has been trading comfortably below its 100-week EMA level for the last three weeks. The 14-week RSI is in the bearish region, and is in a falling state, which is a bearish sign.

Talking about the crucial level, the Nifty Midcap 100, for the zone of 47200-47000, will act as an immediate support for the index as the election result has been put in the field of day. If the index slip below the level of 47000, the next critical support is placed on the 46400 level. The Side Late will act as a crucial barrier to the zone of 48800-48900.

For the Nifty Small Cap 100, 14200-14100 will act as a crucial support for the index as a Fibonacci retracement level of 50 percent of its previous rally (8682-19716) placed in that field. The Side Late, the zone of 15100-15200 will act as a crucial barrier to the index.

Q. Shares such as Polic AB B and KE have seen sharp sales pressure in the past few sessions. What is your point of view?

Policab and KI Industries stocks declined sharply last week following the announcement of the entry into the wire and cables industry of the ultrech cement. Technically, both stocks are in a strong downtrend because they trade below their short and long -term dynamic average. Velocity indicators and oscillators also indicate strong bearish speeds in these stocks. Therefore, we recommend avoiding these stocks for now.

(Connection: The recommendations, suggestions, opinions and opinions provided by experts have their own. This does not represent opinions of economic time)