European and US markets recovered and consolidated on Friday after panic sell-off
DIIs strongly defended the market with sizable inflow on Friday
Markets are doubtful after last weeks sudden and sharp sell-off.
FIIs sold on Friday
Corona virus second wave doubts are growing
Global Markets: Nervousness
Both US and European markets pull back from sharp sell on Friday. The assets classes were also consolidating after losses. US volatility index reversed some of the sharp up move. Crude oil is sharply down this morning. Global market mood seems to have changed from bullishness to nervousness
ASIAN Markets this morning: - Negative
Asian markets are doubtful and almost all the indices are trading in negative territory. SGX Nifty is trading about 100 points below yesterday’s Nifty close. It is recovering from morning lows.
Wholesale inflation numbers will be released today.
India: Wil Nifty build on Fridays sharp bounce?
Global markets growing anxious on second corona wave will shine spot light on corona virus situation in India. The infections are accelerating in India compared to other economies. This fact was in not focus as global markets were bullish on US job numbers and dovish US Federal reserve, European Central Bank.
The global market mood turning nervous is not good for Indian markets. FIIs have started selling and remains to be seen if they continue to sell in cash market. DIIs defended the markets with heavy buying on Friday. Will they continue do it if it becomes clear that they will have opportunity to buy at even lower prices?
What may happen today after Friday's sharp bounce?
Today’s market direction will largely dependent on what FIIs are going to do. DIIs may continue to buy at lower levels that will support the Nifty from breaking down. Hence break down below Friday’s close seems unlikely today while upside is limited because of edgy global market mood and FIIs selling. Therefore, the market may stay volatile and range bound today
Cholamandalam Financial Holdings will declare quarterly results today.
NIFTY -Technical Bias:
Price Action & Pattern:
After a sharp recovery on Friday from lows, the market is likely to consolidate for a day or two. However nervous market mood may create a negative bias. Therefore, I expect Nifty to trade between 10K to 9700 and stay volatile. Nifty breaking below Friday’s low will confirm extreme bearishness that could see a sharp selloff. However this looks remote as of now. India VIX will offer hints about how the panic situation is building up.
Traders need to stay watchful for downside breakdown. However, since I expect market to be range bound. Strategies that will work on sideways market are appropriate but need to mindful of price action at the swing lows and quickly adjust the spread if bearishness builds up.