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The Indian stock market is expected to open on a positive note, with both the Sensex and Nifty indices poised for a strong start, building on gains predicted by the Gift Nifty. This comes after a day of choppy trading on the 12th of August, where quick profit-taking at higher levels led to a reversal of early gains and a close in the red for the benchmark indices. This reversal has put a temporary halt to the bullish momentum that had been building up ahead of the release of key inflation readings from both India and the United States. While the broader markets presented a mixed picture, with smallcaps outperforming midcaps, the India VIX, a gauge of near-term market volatility, eased, suggesting a degree of stability despite the previous day's fluctuations. Foreign Portfolio Investors (FPIs) were net sellers, offloading shares worth Rs 3,399 crore, while domestic institutional investors (DIIs) provided support by net buying shares worth Rs 3,508 crore. The key to the market's direction lies in breaking out of the current trading range. The Nifty index remains confined within the 24,700–24,300 range, and a decisive move beyond these levels will likely dictate the next trend. Strong support zones have so far prevented significant declines, helping to establish a base for the index. However, the index continues to trade below key moving averages, which contributes to a cautious sentiment among market participants. This narrow range has acted as a pivotal zone for the past four trading sessions. If a breakout were to occur, it could potentially align with the 200-day exponential moving average (DEMA) and an unfilled gap, which could create a favorable setup for a more sustained trend move. The index has faced repeated rejection at its 100-DEMA, which is currently near 24,590. A sustained move above this level could trigger short covering, potentially leading to further gains. Conversely, on the downside, a break below 24,340 could extend the fall towards 24,200, where the 200-DEMA is positioned. The daily Relative Strength Index (RSI) hovers around 40, which does not currently provide any convincing reversal signals. Overall, the current market setup suggests a sideways bias, which implies that range-bound trading strategies might be the most effective approach for the time being. This is also echoed in the analysis of SAMCO Securities. Dhupesh Dhameja of SAMCO Securities noted that the index remains trapped in a consolidation zone of 55,600–54,900, with repeated false moves keeping traders on edge. Similar to the Nifty analysis, he pointed out that while supports continue to hold firm and have created a notable base, the price remains below key moving averages, which maintains a fragile sentiment. The index has repeatedly failed to break out of this zone over the last four sessions, making it a crucial inflection point. He believes that a decisive close above 55,600 could trigger a momentum shift in line with the 100-DEMA, while sustained trade above the 10-DEMA at 55,543 may open the door for short-covering rallies. On the downside, a break below 54,900 could pave the way towards 54,450, where strong historical support lies. The daily RSI remains below 40, signaling a lack of strong bullish momentum. He recommends a “range trading” approach as the most tactical strategy for the current market conditions.
The India VIX, a measure of market volatility, inched up slightly by 0.12 percent to 12.23. This indicates that despite global market headwinds, volatility remains relatively contained, suggesting that market participants expect consolidation rather than a steep correction. This suggests a degree of caution among market participants, but not outright panic. The Put-Call Ratio (PCR) has experienced a sharp drop from 0.99 to 0.65, highlighting the stronger stance of call-side participants. This decline in the PCR suggests that more investors are writing call options compared to put options. This is a shift from the previous situation where the PCR was closer to 1, indicating a more balanced or slightly put-heavy market sentiment. When the PCR falls below 0.7 or moves towards 0.5, it typically indicates that selling in call options is higher than selling in put options. This reflects a more bearish mood in the market, as investors are more inclined to sell calls (betting that the price will not rise significantly) than to sell puts (betting that the price will not fall significantly). However, it's important to note that a low PCR can also sometimes be a contrarian indicator, as it can signal that the market is oversold and potentially due for a rebound. Therefore, it's essential to consider the PCR in conjunction with other technical and fundamental indicators to gain a more comprehensive understanding of the market's direction. In summary, the Indian stock market is expected to open positively, but faces resistance within defined trading ranges. The key levels to watch out for are the breakout points from these ranges, which could determine the next trend. The India VIX suggests that volatility remains contained, indicating expectations of consolidation rather than a sharp correction. The drop in the PCR reflects a more bearish sentiment in the market, but it should be interpreted cautiously and in conjunction with other indicators. Investors are advised to adopt a range trading strategy in the current market conditions and to carefully monitor the key levels mentioned in the article to make informed trading decisions. Remember to consult with a certified financial advisor before making any investment decisions, as the views and investment tips expressed in the article are those of the investment experts and not of the website or its management.
The article provides a snapshot of the Indian stock market's outlook for August 13th, highlighting the anticipated positive start for the Sensex and Nifty indices after a day of choppy trading. It also analyzes the prevailing market sentiment, key levels to watch out for, and expert opinions on the most tactical trading strategies. The decrease in PCR has indicated bearish sentiments with more call sells than put sells, suggesting that most people believe the price will not rise significantly. The article acts as an important source of information to help in investment decisions. The article emphasizes the need to be cautious and to consider a range-bound strategy, highlighting the importance of monitoring key levels and the India VIX. The expert opinion is from Dhupesh Dhameja from SAMCO Securities, indicating what strategy he thinks would be most effective. The article suggests an important perspective, indicating a careful approach to the market, and suggesting possible approaches to deal with such situations. While the article is overall helpful, and insightful, the readers should be cautioned to always consult a financial expert before making any financial decisions, since every decision that an individual makes must cater to their individual situation.
Source: Sensex, Nifty set for a strong start; key levels to track on August 13