You need retail funds to join in

The roller coaster ride continued this week as well, just with a little less range for the ups and downs. Nifty seemed to have snapped it up with the gap up last Friday and in the first few days of the week, we were able to hold on to that gain, even though we just managed to cross the previous week’s high. But the attempt was abandoned towards the end of the week and prices fell to the gap, indicating the inability of the bulls to hold the higher levels. This can be seen in Chart 1, the intraday chart throughout the week.

While Nifty may have faltered in the end, Nifty seems to have fared better and managed to maintain its bullish bias until the end of the week. We’ve been looking to the banking sector to provide support and it finally seems to be somewhat fulfilled. Chart 2 shows the same intraday movement throughout the week, with a different pattern compared to Nifty.

Banks are clearly up to the challenge so far. In last week’s speech, I was looking for private banks to step up. They did, to an extent. PSU banks also continued to perform well. Other financial stocks also managed to hold on to gains and contributed to a better view of the sector in general. We need to see more of this, going forward, for the market to continue the upward movement.

The final payment is still a long way off for Nifty. Chart 3 shows how close he came to achieving that distinction. But it faces obstacles from the pitchfork as well as the 1.272 extension to another contra move. Both were grouped around the previous highs seen a year ago, which slowed things down, even as Nifty jumped above its previous highs.

It is difficult to understand what is preventing the market from achieving the new high? Buyer fatigue, perhaps? But fisheries companies were mostly on the buying side. So, who supplies them? DII, it seems. Perhaps the retail “money wall” is not moving so much, but to engage in some commercial activities. Maybe this is the missing link?

Then the question arises of what is holding back retail? Well, we probably don’t have to go far for an answer to that. Chart 4 shows the situation with retail indicators.

The graphs shown are MidSmall 400, Midcap 150, and Smallcap 250 as a proportional chart. It can be seen that all three indicators are bearish and do not approach the highs, like the other indicators. Retail traders’ sentiments are always stuck in their cash portfolio, which is largely made up of small- and mid-cap stocks. As long as this area of ​​the market does not improve, they will not actually be the ones to take the moves with big caps. One can see the striking superiority of the uppercase cap versus the medium and lowercase caps in Chart 5. It should be noted that this outperformance of the uppercase cap accelerated in the past month. There’s always a novelty bias to sentiment, and so it’s not surprising to see a lack of enthusiasm among retail lots.

Chart 5

Therefore, it is clear that retail funds need to return a long time to the markets to enter an upward move again. For now, they seem content to opt out of the rejections. So, buying FII continues to send the market higher, but the lack of follow through with buying is pulling the market back in a little bit again. Some basic trigger must come to break this complicated situation.

Until then, we may see this choppy move continue. It is possible for Nifty to rise to a new level as well but it seems doubtful that there will be much follow through work even then. In a way, this is appropriate. We simply must continue to buy the end of small corrective pullbacks. Technically, one has to identify some form of support where a buy can be attempted. There is no fear of the great regression except in people’s minds. If we overcome this fear, then dealing with the market will not be really difficult.

In the past week, prices have not disturbed the mentioned lower support levels at all. Support runs a bit for next week to 18100/41850. Bullish targets don’t really matter except for day traders. It is clear that the market is heading to the upside, so why put a ceiling on it with levels? But since there isn’t any sector index (except banks) standing up and saying “look at me”, we have to assume that it will be another week dedicated to equities and thus, there are other reasons to wait for good buying opportunities to emerge in order to get involved. Active traders can try to sell mindlessly here and there but avoid any big bearish trades.