Divergence! Selling to Continue? Pre Market Analysis

Here are some of the major updates that could move the markets today:

Stocks

Shares of TCS and HCL Tech will be in focus as the companies will announce their first quarter earnings today.

Adani Enterprises has raised Rs 1,250 crores by allotment of 125,000 secured, unrated, unlisted, redeemable, non-convertible debentures.

Mahindra and Mahindra reported total sales of Rs 59,924 units for the month of June. This compares with 51,319 units sold in the same month last year.

What to Expect Today?

NIFTY opened with a gap-up at 19,431 yesterday and rallied. The index almost touched all-time high and then fell. The index broke the major levels and closed at 19,439, up by 84 points or 0.43%.

BANK NIFTY opened with a gap-up at 44,998 and rallied. There was resistance taken at 45,100, the hourly chart level and gave a huge fall after breaking 44,940. There was another 300 points fall and BN closed at 44,745, down by 116 points or 0.8%.

IT closed 0.45% higher.

The US markets closed higher. The European markets also closed higher.

The Asian markets are trading mixed with Nikkei trading 0.7% lower.

The U.S. Futures and European futures are trading flat.

GIFT NIFTY is trading 65 points higher at 19,550.

All the factors combined indicate a gap-up opening.

NIFTY has supports at 19,400, 19,320, 19,265 and 19,200. We can expect resistances at 19,500, 19,550 and 19,600.

BANK NIFTY has supports at 44,800, 44,500 and 44,280. Resistances are at 44,950, 45,100, 45,370 and 45,660.

NIFTY has the highest call OI build-up at 19,500. The highest put OI build-up is at 19,400. PCR is 0.9.

BANK NIFTY has the highest call OI build-up at 45,000. The highest put OI build-up is at 44,500. PCR is 0.6.

Foreign Institutional Investors net-bought shares worth Rs 1,200 crores. Domestic Institutional Investors net-sold shares worth 7 crores.

INDIA VIX is at 11.

There was divergence yesterday as you can see on the chart. Bank Nifty broke the day-low and closed in the red whereas NF protected the day-low and closed in the green.

Option sellers who delayed their exit might have landed in trouble.

Bank Nifty had three weak red candles in the day-chart. Do you think this is going to be a pull-back and another trending move is to come? Probably, the selling can continue. It seems that the buyers are slowly losing control in the market.

Germany inflation came out as expected at 6.1%.

US Inflation will be released today. The figure is expected to ease from 5.3% to 5.1% and it will be out at 6 PM IST.

Our inflation data also will be out today at 5:30 along with Industrial production data and Manufacturing Output.

Note that Bank Nifty looks bearish and a further sell-off can be expected in the coming days. Will divergence come to an end by Nifty joining the party?

I will watch 19,400 on the downside in NIFTY. 19,525 can be watched on the upside.

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