Rise in India VIX is a sign of topping out; 17570 could be a congestion zone next week: Anand James

In an interview with ETMarkets, James, said: “Weekly charts look strong which encourages us to move the near-term objective higher to 18200. The alternate scenario sees a decline to 16800, in the event of 17570 remaining unconquered this week.” Edited excerpts:

A strong week for Indian markets as both Sensex and Nifty50 scaled crucial resistance levels. What led to the price action was it FII’s short c0vering that pushed markets higher.

The first week of August saw just a continuation of strong inflows into equity markets that stepped up in the last week of July.

As opposed to an average net sale of Rs 41,424 crores per month by FIIs in the first 7 months of 2022, August saw FIIs as net buyers in the first week.

Prior to this, the approach of expiry day had attracted short covering in the index futures which ensured that FIIs were left holding close to 60% of their index futures as longs, in stark contrast to just 16% as longs in mid-July.

There was no visible change in stock futures’ ownership though. In other words, risk appetite vastly improved in the cash market, aided by earnings positivity.

Risk appetite was also helped by a sharp fall in volatility with VIX dropping to sub-16 levels in the first week of August from 22 levels in July which encouraged traders to break out beyond the 16800 mark that had proved to be a giant wall of worry since May.

Where do you see Nifty50 headed in the coming week? Important levels that investors should watch out for?

The formation of a broadening wedge pattern puts an end to the blistering series of upmoves, but not necessarily the uptrend as such.

We have stepped into a consolidation period with ample opportunities for traders on either side, especially given the rise in VIX.

Favored view for the week ahead expects upside attempts to slow down on approach to 17450-17570 region and downside attempts to slow down on approach to the 17220 vicinity and 17570-17160 range would have to be broken for Nifty to wriggle out of consolidation bias.

For the medium term, 17750 is truly a congestion region worthy of forcing a supply pressure on the first test, unlike the one we have seen so far on a test of 17500.

Weekly charts look strong which encourages us to move the near-term objective higher to 18200. The alternate scenario sees a decline to 16800, in the event of 17570 remaining unconquered this week.


India VIX is up 14% in a week. Do you think this is an early sign of consolidation at higher levels?

Rise in volatility is a sign of topping. But, despite the rise in volatility this week, Friday’s closing of VIX was still below 19, a level which I think could give something for everyone – jobbing opportunities for the traders, as well as dips for investors to accumulate.

Sectorally, power stocks rose the most with gains of over 4%. What led to the price action, and do you think the momentum to continue in the coming weeks?

The gains we saw this week in the BSE Power index were majorly driven by gains seen in Adani group stocks post the strong Q1 performance reported by

, , and Adani Trans.

These three stocks constitute 58% of the BSE Power index and hence helped the index to end the week with good gains, despite Friday’s dip.

Moreover, after heavy selling by FIIs in June, July had seen FIIs adding 1624 crores into the power sector, which is almost 60% of what it sold in July.

But, with earnings momentum fizzling out, and with the BSE power index just 5% away from the year’s peak, power stocks may need a fresh trigger to steam ahead.

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