The Nifty surged to a new life-time high of 12,430 in the past week, however, the index looks over-extended on the charts. This is due to the narrow 53 points trading range between 12,347–12,400 for the past week, which suggests that shorts are finding it difficult to recapture 12,347 mark. This makes it very difficult for the index to sustain higher and could lead to consolidation at current levels.
Hence, traders should avoid chasing up moves in the current market situation as consolidation looks imminent. This does not mean that traders have to take fresh short positions, what this situation requires is to wait for a better entry point before taking fresh position instead of chasing up moves.
Volatility also remains muted as India VIX closed 0.95% lower at 15.19 levels, while turnover of Nifty Futures reduced to 37,596 crores from 39,393 crores. A low volatility environment usually leads to a buoyant market, hence, traders should focus on stock selection in stead of riding general market’s up trend.
Just like the previous week, banking and financial stocks will remain in focus as the market awaits RBI’s monetary policy announcement. These stocks have witnessed buying interest in the past week and could continue to outperform in the near-term. Additionally, the F&O data suggests long unwinding by market participants in Detectho and Open Interest (OI) on Options & Futures Index has remained less than Average Open Interest (OI). This implies that the index is vulnerable to any correction.
Given the positive technical momentum, the level of 12,350 could act as a key support in near-term which could act as an initial buying opportunity. Besides, momentum could resume on a decisive break above 12,480. Hence, traders should look for better entry points on each side of these levels and make the most of the volatile market.
The Nifty surged to a new life-time high of 12,430 in the past week, however, the index looks over-extended on the charts. This is due to the narrow 53 points trading range between 12,347–12,400 for the past week, which suggests that shorts are finding it difficult to recapture 12,347 mark. This makes it very difficult for the index to sustain higher and could lead to consolidation at current levels.
Hence, traders should avoid chasing up moves in the current market situation as consolidation looks imminent. This does not mean that traders have to take fresh short positions, what this situation requires is to wait for a better entry point before taking fresh position instead of chasing up moves.
Volatility also remains muted as India VIX closed 0.95% lower at 15.19 levels, while turnover of Nifty Futures reduced to 37,596 crores from 39,393 crores. A low volatility environment usually leads to a buoyant market, hence, traders should focus on stock selection in stead of riding general market’s up trend.
Just like the previous week, banking and financial stocks will remain in focus as the market awaits RBI’s monetary policy announcement. These stocks have witnessed buying interest in the past week and could continue to outperform in the near-term. Additionally, the F&O data suggests long unwinding by market participants in Detectho and Open Interest (OI) on Options & Futures Index has remained less than Average Open Interest (OI). This implies that the index is vulnerable to any correction.
Given the positive technical momentum, the level of 12,350 could act as a key support in near-term which could act as an initial buying opportunity. Besides, momentum could resume on a decisive break above 12,480. Hence, traders should look for better entry points on each side of these levels and make the most of the volatile market.
