NIFTY – The basic structure and counting remain the same as yesterday. Correction is now due and should come without warning. However, we need to remember that the markets have come up in a fast-phased manner and MAY OR MAY NOT distribute further(move sideways ) for some time.
Today is clearing day and we can see volatility.
I have drawn the orange rectangle as per fibbonacci values. Most likely we should see correction till around 19000 levels (depending on whether we correct from present levels or go a little higher(50-100 points and then correct.
NIFTY – REASONS FOR VOLATILITY DURING CLEARING DAY
The main reason behind volatility is derivative expiration. This includes options and futures contracts. In India, options expire weekly whereas futures are monthly instruments. Derivatives are instruments where borrowed money plays a roll. So on a clearing day, these instruments expire which makes it necessary for the holder of these contracts to either roll over or stay out of the markets. Thus there is tremendous pressure on both sides, where derivative squaring up keeps the market oscillating.