11 August 2017 (7:55 AM IST)
We had started writing about signals of a trend reversal in Indian markets since early this month and now, that uptrend has reversed to give way to a lower trend.
SGX Nifty is down by more than -100 points in early trade, spooked by both local and global geopolitical tensions being faced by Indian markets. India and China were already involved in a border dispute when tensions flared between North Korea and the U.S. The Indian rupee had a big fall against dollar yesterday on these regional worries and today also, the currency continues to trade lower.
Technical indicators had also been turning negative for Nifty and Bank Nifty. Both these indexes had fallen below their 20-Day Moving Average and yesterday, these indexes barely survived breaking down below 50-Day MA. Today’s gap down opening is expected to break that technical support.
Bank Nifty had done a strange thing yesterday. This index is showing a flash crash on some charts, where it touched a very low level of 23,822- almost 400 points lower than yesterday’s closing. Not sure about other banks but the daily chart of ICICI Bank is also showing this split-second crash, which was not reflecting during trading hours. Such flash drops are not a good sign for this sector. It will be interesting to see if Bank Nifty goes down to that level in regular trading, in the forthcoming sessions.
Nifty is facing a gap down opening so previous day’s pivot level will change with the opening numbers. Support and pivot mark could turn into resistance levels. Right now, the intra day pivot is at 9,829. Resistance levels are 9,883- 9,946-9,999 and support levels are expected to be near 9,766- 9,713- 9,650.
After a big gap down opening, markets can either trade in a narrow range, or improve up to some levels, or continue to trade lower.
Wait for some time after the opening bell to see which of these possible trade scenarios emerge, then trade accordingly.
Good luck, enjoy the session!