As the market slipped in the morning on the back of the news that the Adani group holding FPI's has their demat accounts frozen it led to what was an early selling spree.
However towards the end of the day we had the stocks recover and the headline nifty index closed almost at the breakeven level. The pattern for the day will be seen as a doji which is a classic pattern which shows the indecision on the behalf of the market participants to take any new position or commit to it with a reasonable size.
The midcaps in the morning session took a beating and then slowly recovered throughout the rest of the day, the sector still remain vulnerable to a correction and we will probably and up seeing some more correction in the sector over the coming few weeks.
The chart above shows the divergence in the nifty versus the bank nifty - where we see the recent highs in the nifty have not been followed with the highs in the banknifty as well. That is generally taken as a warning sign as it shows that a major sector in the market is not able to go on to make a new highs and perhaps the recent highs in Nifty are a sort of an intermediate top. Of-course the hypothesis is also supported by the stretched momentum oscillators and the market breadth which is looking like it is in the overbought territory.
All in all the view remains that the risk in the market at the current juncture is very high and that we can see some more correction or sideways movement in the coming days.