What goes around, comes around

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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Below is a chart of Nifty historical PE from 1999 onwards till today. 

The PE data is sourced from NSE website.  I assume it is trailing twelve months (TTM) PE.  In any case, we will attempt a broad investing theme here so as long as we follow NSE data the analysis remains valid.

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In same vein as yesterday observations lets see what we got today:

1. The AD ratio and Up/Down percents are still showing pressure on broad market

2. The no of stocks above 50 SMA has been in downtrend last 3 days.

3. The volumes both in NF and cash have declined sharply today. Cash vol actually more than NF vol, haven’t seen that in a while.

4. Volumes are lowest since 2nd Jan 09. While then was end of holiday period for many institutions, can’t say what is making everyone ditching the markets now! Is it wait-till-elections attitude, is it aversion due to yet unsolved Satyam fiasco, is it expected higher fiscal deficit, or is it just watch which way US markets go ? Most likely the last reason in short term but I also suspect wait-till-election could be reason in the medium term.

5. NF came close but still could touch boundary of gap of 2800 made on 17th Tue. The two day of bounce has been a very weak bounce, it is more of relief that we did not fall down further. However up closing white candles for 2 days still may give minor hope to bulls.

6. FII still selling and DII support is keeping the Nifty afloat with its dignity intact!

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After sharp sell offs from 2950 + levels of last 2 trading sessions, today some relief was seen in Nifty.

From up/down percents, the broader market however seems to be seeing selling. The not so good AD ratio and declining NH-NL inspite of up Nifty close means that broad market is coming under pressure again. That was the same situation till a week back or so when Nifty up closes were not reflected in broad market stocks performance.

FII data is negative again, DII continue to do some buying. If DII also start selling market may see sharp declines.

NOTE: the pivots etc for Nifty Fut may be wrong due to seemingly wrong High value of 2915 in supplied data for NF.

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