I always follow capital flows but it is better to have more information in the form of technical perspective
Below is the take on market from Neppolian,an excellent technician.
Nifty @ 10475 – update
Nifty has fallen by 1300 points from the top as it failed to sustain the channel breakout at 11300 for the second time.
However Nifty is getting oversold in the near term as it gets closer to its 20MMA at 10300 and 100WMA at 10100. The trendline support drawn from Feb 2016 bottom of 6825 is placed at 10200.
The internal breadth indicators are reaching historical oversold levels too as under:
% of Nifty50 stocks trading above:
20DMA = 6%
50DMA = 14%
200DMA = 32%
50>200DMA = 58%
The near term 20DMA and medium term 50DMA gauges are now trading at historical oversold levels which is likely to bring support to Nifty if it were to fall further. In our experience when breadth reaches such oversold levels markets bottom out within max of next 2-3% fall.
So we can expect a pullback rally to emerge sooner than later. Any portfolio course correction need to be done only in pullback rather than at current panic levels.
Trend Qualifications:
The long term bull trend, though intact, has certainly suffered a serious setback with two failure breakouts abv the channel once in Jan 18 and now in Sep 18.
Both Nifty and Bank Nifty are yet to print a lower top. In our sense the next pullback rally may probably facilitate a lower top at 11000-11200 in Nifty and 26000-26500 in Bank Nifty. Only post printing a lower top we can conclusively turn bearish.
Few other factors which could keep near term downside limited include a possibility of USD-INR staying under 74 and Nymex crude holding under 78 on a closing basis. Both are at important resistances.
Challenges in the near could come from the possible correction in US indices (signs are emerging in short term ) and raising 10 year yields.