By Anand James
July series ended with Nifty rollovers at 84%, marking the highest level recorded in the past year and a half. The Auto, Capital Goods, Energy, Oil & Gas, Pharma, Realty and Telecom sectors experienced significant increase in long positions. Meanwhile, the Media sector saw short covering. In the Chemical sector, all its stocks witnessed a short buildup. However, the Healthcare sector stocks made equal contributions to both short buildup and long buildup. Compared to previous two series, Auto, Cement, Chemical, Financial Services and Realty stocks saw high rollover while Media, Metal, Oil & Gas, Pharma and Telecom sector saw low rollover.
For Nifty, despite penetrating the 19,620 region which had so far thwarted several downside attempts, the swing higher towards close on Friday is very encouraging, having bounced off 20d SMA. This set up is also supported by a positive divergence as well as a dragonfly formation, suggesting that Monday should be open to the prospects of reclaiming 19,700, followed by an attempt to penetrate the 19,770-840 region which has been key region to surmount, after turning lower from the 20,000 vicinity early this month.
Alternatively, inability to reclaim 19,700 or a direct fall past 19,620 again could signal a 19,000 plunge, with hopes of 19,460 stepping in midway. That said, favored view is hopeful of upswings early next week. Meanwhile, Bank Nifty has a similar pattern as Nifty, but looks less vulnerable with its 50d SMA lying just 2% below, encouraging us to look for upswings, but will be watchful for a break above 45,860 to signal bullish confirmation.
(Anand James,Chief Market Strategist at Geojit Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)