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Stocks

Nifty, Stocks, DIIs and FIIs

This will be a slightly technical post.

The Nifty broke down below it’s 200 Day Moving Average – a fairly significant event, because it doesn’t do that often.

Nifty breaks 200 DMA

(Click for a larger image)

Tough market today, when both FIIs AND DIIs sold.

FII and DIIs selling

In the last two years, we have seen the 200 DMA tested twice, and the Nifty bounced back each time; are we going to see it bounce back again?

My feeling – probably not. There is some serious weakness out there. Look at a few weak stocks:

 

L&T
L&T

  • Downtrend continues
  • No strength
  • Big Downside volumes

DLF 
DLF

  • Lowest in three years
  • Heavy downside Volume

MTNL
MTNL

  • Lowest in three years
  • Huge FII selling

ICICIBANK
ICICIBANK

  • Stuck in a down channel
  • Tough if it breaks 1000
  • Watch 50/100 DMA recent cross

(click charts for larger images)

There are some strong stocks – TCS and TATACOFFEE for instance. But it was a weak ending to the January series in F&O, and we have to see if the 200 DMA holds over next week. The above four stocks have some serious enthu if you don’t mind going short, but keep your trailing stop losses close, and watch if volumes explode in either direction.

At this point the possible direction is: stay short nifty if there continuation of panic with the 200 DMA as a stop loss. If there is a pullback to the 200 DMA, cover and watch if it breaks it again to the downside, and short it again. If it stays up, you gotta wait for a different technical signal to go long. (These are really short term signals – less than a month – so fundamentals folks kindly excuse)

Disclosure: I have positions. Some short, some long.

  • Anshul Gupta says:

    >Deepak,

    Is it worth selling 5100 puts of Nifty or 850 puts of reliance? Technically what could be the max downside? What is the next level to watch for?

    Regards,
    Anshul