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Inter market divergence with Midcaps

13 Mar 2021 ‚óŹ 12:14 PM

Inter-market divergences between Nifty and Midcaps are more important than Nifty and bank nifty, though both can be sighted. The Midcap index is representative of a different group of stocks in the cash market. Nifty represents the largest of large caps. So twice before in the last year, we saw the two diverge short term before a 5-6 day correction and as shown but were wave c of an a-b-c pullback. So a month later than where Nifty made its post-budget high, the Nifty is still struggling and the Midcap index has made new highs, this has resulted in another similar negative inter-market divergence between the two. This week we will watch out for follow-up action to a meaningful low from where the next advance can start. Only a move in Nifty beyond 15431 would cancel out this observation. The recent bounce has the characteristics of a wave b bounce as it is hard to count as 5 waves anywhere.

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