Medium-Term Broad Range: Nifty 3150-4250

There is a query from Dark Knight Abhay in the Comments section regarding Market Outlook from the Short-term horizon. He has bought a few trading stocks around Nifty 3600-3650 levels.

Hi Viral,
You commented earlier that if nifty has a weekly close of 3550,it may touch 3800-3850 levels. So do you still recommend that one should hold on till 3800?

My Reply:

In very short term , Nifty is largely range bound in 3600-3720 narrow band. Previously, when i had recommended an upside break-out for Nifty at 3500 levels which was a crucial hump for the markets, the recommended levels of 3550 was only for confirmation of risk-free new break-out trend. This break-out indeed happened for the good, and we tested almost 200 points higher @Nifty 3700 during one of the trading sessions in the previous week. A 200 point break-out on Nifty above 3500 is a good appreciation in actual terms.

In very near-term, markets are undecided about its next move & thus consolidating in 3600-3720 range. May be, quite possibly, markets are somewhat over-bought what with a humongous rally in Nifty since 2600 levels witnessed just a couple of months ago.

Dear Abhay...My targets of Nifty 3850-4250 are from the perspective of MEDIUM TERM broad range and not short-term horizon. Just like we consolidated for 5 months in 2500-3150 range , the next big trading range for markets from now on may well be 3150-4250.

That does not mean Nifty 3850 are up for grabs in a unilateral fashion in a vertical climb-up. Markets should, ideally, move down or consolidate before touching such dizzy targets. One never knows... may be, market consolidation within Nifty 3600-3720 could as well be a part of that much needed cool-down. In any case, if market surprises by unilaterally inching up following positive global cues, than the upside would definitely be capped around Nifty 3800-3850 before any other major up-move towards 4000-4200.

But, all-in-all, chances of a big cool-down in the range of 3150-3350-3720 is high for next few months seeing at the proportion of market rally we have had in last two months.

For Your Trading bets...
For BHEL, IDFC & Videocon i've clearly mentioned targets and Stop loss levels in my previous postings. IDFC looks strong unless it can sustain above Rs.82 on closing basis. BHEL has a strong support at Rs.1500. Two other calls were given in my previous post on Suzlon and HCC which are depicting strong trend on the upside. Stop losses are a must for any kind of trade be it for short-term or medium-term.

CONCLUSION:

My View: 3150-4250 is Medium-Term Broad Range.

Option 1: From here markets look over-bought in very near term outlook & Nifty may as well take a breather with Support @3500 & ultimate support @3350.

Option 2: Markets may surprisingly keep on rising if constantly backed by positive global cues. But, then, there may be an upside cap around 3800-3850 in short-term.

Chances for option 1 to fructify is strong, but one cannot rule out a small up-move from 3700 to 3850 in near term driven by continuous momentum around the globe. Momentum can sometimes over-ride fundamentals & valuations. Political outcome has the capacity to turn any form of trade on its heads.

I would say, book Part profits even in your short-term trades. When markets are so much inflated in so little a time horizon, it is better to play safe partly. Reduce your risk but still don't give up all your positions. Fresh Buying is recommendable around Nifty 3500-3550. And, an Aggressive Buy is thoroughly recommended around 3350-3450 range for Trading purposes.

Long-term Investors:

Investment Buying to be done around Nifty 3150-3350 range. Long-term Investors should wait with patience and perseverance. Markets have given a break-out on the upside after a long consolidation of 5 months. The old range of Nifty 2500-3150 holds no more & a new range of Nifty 3150-4250 has developed which will stay over here for quite some while. So, for those who missed value plucking around the bottom of Nifty 2500, can plunge in around Nifty 3150-3350 range which is somewhat a starting point of 3150-4250 broad range.

Most of the long-term investors have had a missed out feeling of not being able to buy around market bottoms. So, now these unleashed funds will come out for shopping on every dips and support the market on every dip and consolidation. So, funds on sidelines should maintain caution & patience. In the short-term, it would be difficult to see markets below Nifty 3350-3400 levels.

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