“As we all know, recently, the opening direction is decided by the global bourses and in-line with massive rally in US bourses on Friday, our markets opened higher to surpass the 10300 mark in the initial trades. This was followed by some consolidation; but once again a strong bout of buying was seen in the latter half; extending morning gains by a fair margin. Eventually, the Nifty concluded well above 10400 by adding nearly couple of percent to the Friday’s close and in the process, managed to clock highest single day gains in last few months.
Looking at Friday’s close, no one would have expected such gigantic bounce back. Some traders expected resumption of downtrend and others were looking for some relief rally; but not with such magnitude. In fact, if we refer to our previous article, we did not expect the bounce back move extending beyond the 10400 mark. But eventually, we always need to respect or rather we should say accept what market does. The beaten down heavyweight pocket ‘Banking’, came back smartly and had shown tremendous resilience at lower levels. Looking at today’s smart bounce back, we may extend the relief rally towards 10460 – 10500; but, our directional view remains unchanged. We advise traders not to participate aggressively in this move and should rather lighten up longs at higher levels.
For next couple of days, stock specific approach is recommended; but one needs to be careful while picking up a stock and should ideally trade with a proper exit strategy. For the coming session, 10360 – 10300 would be seen as immediate support levels. Today, during the second half, PSU banking stocks rebounded smartly. Since they are deeply oversold, traders are advised to book out existing shorts for a time being.”
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