Tuesday, July 21, 2009
Abhay has posted a query in the 'Comments' section regarding movement in Nifty and market trend. As per his comment he is expecting some cool down after recent sharp up move in last few sessions.
I HOPING AND SOME WHAT PREDICTING FOR A 100-300 PT CORRECTION IN NIFTY IN VERY SHORT TERM. WHAT ARE YOUR VIEWS?
Firstly, important to understand over here that the Trend has again turned in the upward direction in the near term. The break down below Nifty 4250 proved false for a sustained down trend. Nifty has bounced back vigorously after testing 3900 on the downside. Since then Nifty has fully engulfed the bearish move by rising above an important resistance of 4250 levels and now within testing distance to break above 4500 zone.
A correction of about 125-200 points on Nifty could be more likely, after witnessing a steep run-up in last week. But, again, it may or may not happen as per our expectation. Markets might as well choose to simply consolidate around current levels before next up move.
But no markets can move in single direction for a long time. So, traders should preferably look for a dip to take an entry at lower levels. During such strong momentum, even the corrections could turn out to be short lived or sometimes even as compressed in nature as intra-day correction only. Traders can buy around Nifty 4250 (which seems a bit unlikely even if markets choose to correct marginally) to 4350 zone. Accumulation of first lot of buying could be done around Nifty 4350-4300 which could prove to be a health entry point from Trading perspective. If markets choose to correct from here, traders can buy around Nifty 4350 with target of 4600-4700 on the upside, when the rally blooms again after a short correction.
On the other hand, long term investors need to wait patiently and hold on to their holdings and record price appreciation for their existing portfolio. Investors were recommended to start accumulation in Nifty 3900-3950 zone during the recent downturn. But, we missed out on aggressive buying spree as lower levels looked imminent then, but didn't turn up. At least, we were able to do some bit of cherry picking at the lowest point of the past 4250-3900 range. Investing should be a slow and a patient affair.
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