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Nifty Premium/Discount

17 Jul 2020 ‚óŹ 07:38 AM

While in the short term when the Nifty discount went back to zero it signaled a short term correction and we did get 200 point cuts in nifty the last few times, a medium term outlooks says this is nothing. What do I mean. Go back to this chart I published 2 weeks ago calling for a short squeeze. It runs a 30 day average of the Nifty discount/premium data to look at the trend in the data. We are on average today lower than we were in March. So while you do get one day points where the data is marginally positive the reading yesterday was (-15). This is contrast to the reading at the Jan top of +40, a large premium seen at many market tops. so does the reading today signal a market top? On average for the medium term I would not think so. What this suggests is the underlying bearish sentiment that continues to persist among traders willing to short on the slightest of negative news. The short squeeze will then go on for a long time till sentiment clearly changes for the better. We are at the lowest reading since July 2008, not exactly what you get in bubbles. Yes some people are calling the market a bubble. This chart says "Not even close"

premium 170720

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