The broader market Niftu 50 index had taken a severe hit on Friday, falling by 292 points to 24,852.15 which is the lowest closing since 26 August 2024. The primary reason for the fall is the reignited concerns regarding the potential recession in the US which dragged the US benchmarks, the ripple effect of which was seen in the Indian markets.
Another key reason that helped in marking the top is the GDP data. On Friday, after the market close India’s GDP growth data for Q1 FY25 came in at 6.7%, not just falling below 7% but also the lowest in the last 15 months. Hence on Monday (2 September 2024), the market made a top and the selling started from thereon.
Now the question is what could be the next support and has the trend changed to downwards?
Although the correction was decent, the complete trend reversal hasn’t taken place yet. There has to be the formation of lower lows and lower highs (LL & LH) to mark the initiation of a downtrend which is not the case yet. If the market rallies for the next couple of sessions and then falls back below the low of Friday, then the LL & LH formation can be seen.
So the trend is positive yet and this dip can be seen as a buying opportunity. However, the concern here is that the nearest support level present is quite deep, at around 24,000. With the CMP of 24,852, there is a further scope of 850 points on the downside, which makes it difficult to capitalize on the dip.
Hence it is better to trade a shorter time frame. On the 30-min chart, the correction is more evident and there the dips can be used to make long positions with small SLs and targets. Due to a sudden spike of 7.11% in India VIX on Friday, totaling 13.6% for the week to 15.22, increasing volatility should be kept in mind before trading.
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