Bull vs Bear: Which Way Will the NIFTY Move? | CA Rachana Ranade

[00:00:00] You know market currently is divided into two categories of people like Chandu and Bandhu. People who belong to team Chandu they feel that market will fall by almost 10% from this level as well. But if you want to ask people who are from team Bandhu, they feel that market can zoom up by almost 10% from this level.

[00:00:25] And I'm sure you also either belong to team Chandu or team Bandhu or you are confused who is correct. So what we are going to do in today's video is that we are going to understand both perspectives that if market were to go down what could be the reasons? If market were to go up what could be the reasons? And towards the end is a very interesting data point where I have analyzed last 20 years of data and tried to see that how have markets reacted when crude oil and US bond yields were at elevated levels.

[00:00:54] So as usual video is going to be extremely informative. Keep on watching the video till the end. Let's start with team Chandu's reasons where people believe that markets can correct by almost 10% from this level as well. And the first reason that I'm going to discuss with you all is technical analysis. Now have a look at this chart. This is where we are right now.

[00:01:20] Always remember previous swing lows do provide a good support. Now if you have to just, I mean if you were to just draw a line from the previous swing low, this is 22,000. I'm going to round it off 22,200 roughly. Are we extremely close to this previous swing low? We are. If this level is taken out, then this could be one more level based on a closing basis. This was the lowest closing somewhere around in February 25. And this again shows us a level of 22,100.

[00:01:50] So 22,200, 22,100 are extremely close supports that we can see right now. And if that were also to be taken out, then this can be still one more support, which is 21,800 roughly. Okay. So three very close support levels. And if all these support levels are taken out, then there is one more

[00:02:11] gap filling theory, which says that any gap which has been created that tends to get filled up. And this is the gap that, or I can just do a alt H. Sorry. This is the gap that I'm referring to. And if this were to be filled, this is 20,200. And if I were to just, if I were to just measure from the current level to this level, this is almost a 10% fall from the current level. And this is where Team Chandu people believe that

[00:02:40] because of the gap filling theory, there is a chance that market can go down by almost 10% from here. But then there is one more cross argument which says that even though FIIs are continuously selling because of the overall weakness, we have DIIs who have been buying like very, like a very strong set of investors. Why am I saying that? Now, if you have a look at this DIFI data is in front of you. I've taken the data from this financial year, March 2026.

[00:03:06] Now, if you can see here, FIIs sold worth 1,22,000 crores in cash. How much did DIIs buy? 1,42,000 crores. So did DIIs buy way more than what FIIs sold? Yes. The picture was a bit different in April where FIIs sold worth 70,000 crores in cash in equities and DIIs bought barely 51,000 crores. So this was, this month was like an exception.

[00:03:31] But check May, June, July, August. I'm just going to quickly round it off for remembering 55,000, 50,000, 5,000, 7,000. And compare it with 82,000, 85,000, 35,000, 58,000 crores. So have DIIs bought way more than what FIIs have sold? Answer is yes. Same was the case with September 44,000 crores sold, 76,000 crores bought. But what about the month of October till date? Of course, till the time that you are watching this video, this number can be

[00:04:01] absolutely different. This will keep on changing. But as I'm shooting the video, it's 36,000 crores as a sell data for FIIs versus buy data for DIIs is 35,000 crores. So in simple words, what we are trying to tell is that if FIIs keep on selling at the same pace or maybe at higher pace, and if DIIs speed of buying reduces, then can there can, can it lead to more weakness in the market? Answer is yes.

[00:04:27] So I hope first two reasons are clear. Third reason is extremely important. And that's exactly what we are going to understand in the next section of the video. Yes, we are going to talk about the third reason, but first understand reason one and reason two went in a sequence. How? In reason one, we said, why is team Chandu saying that market will fall by 10%? We talked about the gap filling theory. Then we said that if that be so, there'll be increased selling from FIIs and a weaker buying from DIIs. So we talked about the investors angle in the second reason. But please understand,

[00:04:57] the investors also need more reasons to sell or buy. And that is what we're going to discuss in reason number three. What started on 6th July actually took turn of events. And that led to our markets in a downward direction. What happened on 6th July, if you remember, there was a violation of a ceasefire agreement and three commercial vehicles were attacked in the Strait of Armos,

[00:05:22] post which the crude oil again started to rise. But before that, did crude oil actually cool off? Of course, yes. And for that, have a look at this. Now, if you see here, roughly around 27th April, April end, after that oil was continuously going down with the hope that yes, war could end soon. And somewhere here, the ceasefire was actually being discussed. But here on 6th April,

[00:05:47] ceasefire violation took place, post which you can see that yes, crude oil has been continuously increasing. Now, what happens if crude oil increases? For us, is it one of the major importing items? Yes. And across the globe, for almost all economies, crude oil is something extremely important for almost every economy, right? If crude oil increases, does the inflation increase? Answer is obviously yes. And if inflation increases, the rates, the key rates increase. For

[00:06:14] example, in India, we talk about repo rate. In US, we will talk about the US Fed rates increasing. And typically, the relation between Fed rates and US bond yields is that if rates increase, typically the yields also go on a higher side. Okay. Always remember that these relations generally work. There could be exceptions in certain cases as well. Now, did US bond yields also go up from that day? If you can see earlier, when the ceasefire discussions were in place, you can see a nice

[00:06:41] downward sloping line. But post which 6th July, again, you can see here, post which the yield started to just shoot up like anything. And even today, they are at crazy levels. And why am I saying crazy levels? I'm going to the monthly chart right now. And if you can see, this is 2007-8 roughly, right? And if I were to, if I were to just take the chart a little bit more,

[00:07:06] here, 2006-7, okay, or J. And this is the level back in 2007. That's what was tested in September and again is being tested here. And it has in fact broken out of this level. So, are yields in an upward trend? Answer is yes. And the latest trigger that we saw was what? Since 6th of July. Did Nifty also take a turn post 6th of July? Yes, we saw a slide, some sort of recovery, but then again,

[00:07:35] a big slide down. So, what do the bears feel? They feel that the crude oil prices may stay elevated, because of which inflation will stay elevated, because of which yields will also stay elevated. If that be so, foreign institutional investors may not prefer emerging markets like India. They would prefer putting a lot of money in bond yield itself. So, these are the reasons for Team Chandu, for why market will stay bearish. But Team Bandu is also not weak. They also have some very strong

[00:08:04] reasons as to why markets should bounce back. And that's exactly what we're going to discuss in the next section of the video. Now, let's discuss Team Bandu's stance and where they are saying that markets will ideally go up by almost 10%. But very important point, Team Bandu is saying that it's not like we are not saying that market will not go down by even one point from here. They are not saying that. Team Bandu believes that the two supports that we discussed 22,200, 22,100 and 21,800

[00:08:30] will ideally hold. So, if that be so, from the current levels where we are right now, roughly 22,400 to 21,800, that's roughly 600 points as a downside risk. But if markets were to take support from let's say around 22,000 levels, they believe that at least it will go to previous swing highs, which is around 10%. So, Team Bandu says we are not even talking about all-time high. We are talking about

[00:08:56] previous swing high and that comes to around 10%. But again, understand if the market sentiment were to turn bullish, data also has to speak up. One important data point here is that is about the GDP forecast. If you know RBI recently when they increased the repo rate, they also said that yes, we are increasing our GDP growth rate, growth forecast basically from 6.7% to 7.1%. But I'm sure there will be

[00:09:24] a lot of people that RBI is this and that and they'll always keep on saying good things. You want external data? No problem. World Bank has also upgraded India's growth forecast from 6.6% to 7.1%. So, what is one common point between RBI's growth forecast and World Bank's India's forecast is both believe that our growth rate of GDP will be around 7.1%.

[00:09:50] And the key growth driver both say is strong domestic demand. So, both feel that yes, there are certain external shocks, the biggest one being crude oil because of which rupees sliding down. But in spite of that, the domestic demand will be extremely resilient, which will give an overall positive sentiment to the market. But yes, two reasons are clear. The third reason is again extremely important, which is about the data analysis of last 20 years. And that's exactly what we're going to discuss in

[00:10:20] the last segment of the video. Now, let's talk about the final point where what I've done is I've tried to calculate a threshold beyond which markets started to crack again. And that threshold is nothing but have a look at this. If you see UK oil was actually cooling off, but this was the threshold. We talked about this 6th of July, where it again started to go above $70 and then it kept on moving up. So, $70 is what I kept as a basic threshold. Okay. Then US bond yields, if you remember again,

[00:10:50] same, they were going down and again, same 6th of July. This is where bond yields are around 4.5% post which it started to go up. Now, what happened in Nifty is when crude oil, where it started to go above 70, yield started to go above 4.5%. That's when we saw this big fall in Nifty of around 9%, right? So, what I am going to do is that, I mean, what I did was that last 20

[00:11:15] years, whenever these two conditions met, which two conditions where the bond yields also went above 4, 4.5% and crude oil was also above $70, I took that as a trigger date. And from that peak to trough, how much was the fall is what I'm going to present in front of you, right? First things first, last 20 years data, first trigger is what I saw was on 7th of June 2007. That is when the Brent crude went above

[00:11:44] $70, it was around $72, yield was around 5.11%, sorry. From that date, if I were to take that as a trigger date, from peak to trough, we saw a drawdown of almost 6%. Same thing happened in 2008, where Brent went above $128, yield went above 4%. Here, the peak to trough was 48.2%, trigger date was

[00:12:10] 28th of May. But I don't think we should take that because 2008 was a big subprime crisis. Everyone knows about that. That's like a one-off case. I think we should ignore that in the current study. Next trigger date was 18th September 2023, where Brent went above $94 and US yield went above 4.55%. And from the peak to trough, we saw a downfall of almost 6.7%.

[00:12:35] Next trigger was on 10th of April 2024, where Brent went above $90, US bond yield was above 4.55%. And that's where we saw a peak to trough downfall of 4.4%. Finally, 7th of July, the date that we discussed a few minutes ago, oil went above $70, yield went above 4.5%. And from the peak to trough,

[00:12:56] we saw a fall of 9.3%. What does this study tell us? Barring 2008, there have not been even a double digit fall in Nifty. And that is the reason why Team Bandhu is saying current fall has primarily happened because of crude and crude has led to inflation because of which the bond yields have also been increasing. One of the key reasons. And in the past, in the last 20 years, this has led to a

[00:13:23] fall of barely 10%. And that's where we already are. So, we believe that the fall may not continue further. We can take a support and from here, we should ideally bounce. Okay. Well, if you ask me, where am I? Team Chandu or Team Bandhu? Obviously, my heart is with Team Bandhu. I'm always a person who loves greenery in the market. And I'm sure heart for you all also will be with Team Bandhu. Question is, where's the brain? It's currently split between Team Chandu and Team Bandhu because the biggest pain

[00:13:52] point is crude oil, which is not in our hands. And the only thing that we have to track right now is can the war halt, pause, stop because of which the oil prices will come down or because of some other reason because of which all oil prices will come down. If that happens, then ideally Team Bandhu has a better chance of winning. What do you feel? Which side you are on? I've given a poll right below this video. Please give in your votes as well. And if you feel there are a few more reasons,

[00:14:20] which can either lead to a stronger move in the market at an upward side or at a downward side, please let me know your thoughts in the comment section as well. I hope you found a lot of value in today's video. If you did, please don't forget to smash the like button. Please don't forget to share this video with your friends. I'll see you in the next one. Until then, take care. Jai and Baba. You might have come across such advertisements on various social media platforms. Please note,

[00:14:46] all of these are fraudsters promising unbelievable returns through stock tips. I don't provide any calls or advisory services. I provide only educational content through my social media handles and through my website rachanaranade.com and rachanaranade.in. I'll see you next time. Bye. Bye.