1. An unexpected day — when people expected Nifty to get a bounce from overnight US cues, it instead made a trend day downward.  Volume picture says ‘healthy’ amount of selling in cash and NF both.

2. Why I say ‘healthy’ selling is that the broad market was already selling off to oblivion for several weeks now, notwithstanding a few days of Nifty rally in between.  Today it was turn of the pivotals including defensives like HUL to sell off.  At least we are not pretending that we can continue to outperform US equities in short term.

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Highlights today:

1. NF Discount narrowed substantially to -15 pts today.  Given positive Asia and Europe except DAX, it would have been a shame if bears wanted to have it all so soon.

2. Reasonably ok volumes on cash and NF.  Looks like whoever went short yesterday covered up a bit today.

3. The FII DII figures are perplexing, the difference is too large.  The unknown hand must account for the rest of buying.

Nothing more, a bear market through and through.  The AD ratio tells what a weak bounce it is.  Up/down percents tell the weak internals of market never mind the nifty figures.  Those who can play intraday moves can make something out of this market.  Not to say that it is easy to do so watching from sidelines is also good option.

 

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Highlights of the day:

1. Given horrible performance of US markets overnight, there was surprising strength in morning and till late afternoon.  To be fair, Asia was not doing too badly.

2. Though we declined in the late session, in the overall picture we and Asian markets are still outperforming.  Not going down a lot does not mean in any way that we are going to go up soon.  In fact it seems more and more that there will be plenty of time to buy over the next 6 months.  Investors can go on summer vacation so to speak!

3. Though I have not done detailed analysis yet, the only reason I can think why we have not crashed like US are two fold: the previous sell-offs on emerging markets in Oct 08 etc were led by redemption pressures on foreign funds.  The current sell-offs by FIIs are not of same variety.  Fiscal deficit, dollar strength, rupee outlook explains some part of it.  But globally, equities are not preferred asset class in these times.  Safety first is the mantra, how else can one explain near zero yields on 3-6 months US treasury bonds?  Stay in cash, period.

4. Though cash volumes continue to be tepid, high NF volumes on down day mean that whatever short covering that happened in morning was reversed forcefully and NF again went into high discount.

5. Reliance and ONGC declined more than Nifty.  Both heavies were somewhat stronger stocks till a while back so if they start to underperform, then Nifty cannot be supported.

6. FII & DII keep doing their tug of war, and FII seem to be winning since yesterday… enjoy!

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Following is a table giving monthly returns of Nifty index since Nov 1995 to Feb 2009.  Nov to Feb months have been averaged over 14 data points, the rest have 13 data points.

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Highlights:
1. First more than 3% decline since 16-Feb when Nifty closed down 3.4% at 2848.
2. NH-NL makes relative low at -230 in Mar, the Feb low was -214 on 24-Feb.  Jan low was -175 on 23-Jan.  The feb high of -17 was lower than Jan high of 1, so it confirms the down trend.
3. The cash volumes of 7134 Cr were lower than 10 day avg.  NF vol were also lower than avg.
4. After many days, FII sold lot more than DII bought.

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Highlights of the day:

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Highlights of expiry day:

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Finally a positive AD, though it does not say much for broad market sentiment, since BSE Midcap and Smallcap indices have already been making several months lows in past few days. That is topic of another post.

NF Feb vol are very low but that could be due to expiry tomorrow and volumes shifting to Mar Fut. Cash vol still quite bad, and this is seemingly becoming a market to stay away from till a decisive event happens in US or in India which is elections. All other events like fiscal deficit/ rating downgrade, bond yields, possible rate cuts are probably already priced in.

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Nifty did not fall so much and can be due to excise duty cut etc. But fact remains Nifty did not fall so much given overnight plunge in US markets.

Broad market is selling off, both NH-NL and no of stocks above 50 Day SMA took a plunge. In fact the previous low of -175 in NH-NL was made on 23-Jan when Nifty low was 2661.65, so NH-NL has made a new low in Feb relative to Jan while Nifty has not done so.

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The market may be selling off but the DII keep buying some here and some there (see FII/DII Data in the end). Indeed it is difficult to imagine how quickly the markets could fall without their support. On the other hand, the FII selling combined with INR getting cheaper means bad tidings ahead for Indian equity markets. The depreciation of INR is not isolated case among world currencies, see earlier post on US Dollar Index breakout here.

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