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Thursday, January 29, 2015

Nifty may start cracking from tomorrow!

Markets are behaving unusual from past 10 days or so. The breadth of market is consistently poor and Nifty and Banknifty are opening gap up and breaking new high! Is this unusual behavior? Lets look deeper..

Any index movement without support of underlying stocks is not real and is looking to be punished. The index movement can be explained by large derivative positions by FIIs and lack of breadth can be attributed to lack of interest in buying by smaller players and DIIs.

So who will win this game. Obviously after expiry today, the motivation of derivative longs to stay long will be reduced. They can book their profits and may not initiate another long position for next expiry month.

This results in at least a week of deep correction and cracks in Index like Nifty and BNF, and hence we can see some fireworks on the downside.

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