Nifty future on daily chart was seen testing the all time high level of 6333 many times, but every time it was rejected from that area. This gives us an idea that, market participants are not seeing fresh all time high any time soon. So we have seen, selling at those higher levels in nifty as well as in bank nifty futures. Banking and real estate stocks were the major dragsters in this sell off. In recent RBI policy, we have seen RBI has hiked repo rates by 25 bps. This was unexpected and markets reacted by major selling in a very short time.
What is trend in Nifty for short term?
Nifty future has entered a short term downtrend, as the trend is down we will be looking for only selling opportunities on nifty future and the every bounce should be treated as an opportunity to go short. Our view will only change when nifty future closes above 6333 on weekly chart.
Which sectors to watch?
Your focus must be on banking, realty and IT. In banking stocks, you can short sell public sector banks like SBIN, PNB, BANKBARODA. Real estate is looking as fresh selling opportunity, DLF, UNITECH are looking good for going short. IT sector continues to outperform the market, traders must stay long on IT stocks like HCLTECH, TECHM, TCS, MINDTREE and INFY.
What global markets says?
American and European markets are looking in trouble, as Fed poised for $10 billion tapering in it’s last meet. This will absorb the liquidity from the emerging markets, so will in India. Therefore, more selling could be seen in near term in markets. Also we are seeing strong USD in near medium term, another major factor which should not be ignored. We might be in beginning of this round of selling.
Where to enter short in Nifty?
We will be looking to short sell nifty around 6170, while placing the stop loss on closing basis above 6245. Targets will be 6050 and then 5955. Risk is about 75 points, while reward will be 120 – 215 points. High probability of this trade makes it worth taking risk.
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Article published on 29.01.2014.