India’s benchmark Nifty slipped almost 90 points in the last hour and registered a low of 11811 approx. The index remained confined in a range of 70 points as the buyers and the sellers fought to take control of the market. Today’s closing at 11828 has tilted the index marginally in favor of the sellers. The important question is, have institutional sellers entered the market?
Have The Sellers Entered?
Although Nifty has witnessed a fall of 90 points in the last 30 minutes, the 3D Delta system is indicating that institutional sellers were not present in the market today. Traders must also keep in mind that for a downside breakout to be triggered, the gamma of the Put options must hit the designated neutral zone when the market opens next week. Since the market has crossed the halfway mark of the June expiry already, any major move on the downside will require the participation of strong institutional sellers also.
What Are The odds of A Buy Breakout?
The chances of a buy breakout may be wafer thin but cannot be ruled out due to the Fed policy. The Federal Reserve is due to announce its monetary policy next week. Options calculations are indicating that the Fed is likely to maintain the status quo. However, the latest CPI data for the month of May revealed that core inflation over the past year has dropped to 2% in May from 2.1% in April. The Fed’s preferred target is based on the personal consumption expenditure price index, which generally remains 0.5% below the CPI (core inflation) data. Thus for an upside breakout to be triggered, the Fed must announce a positive breaking news leading to fresh fund flows into the June expiry.