Nifty 50 Falls Short of 10 Pts From Making a New High!

  • Stock Market Analysis
  • Editors Pick

In Thursday’s session, which was the last trading day of FY24, the Indian benchmark Nifty 50 index remarkably rallied by over 393 points as investor’s enthusiasm sparked a buying frenzy. However, the index fell short of 10 points from making a new all-time high and profit booking from higher levels dragged the index by 190 points by the closing.

Now, you might be thinking that the trend has turned positive. However, if you look at the chart structure, the index is trading in a more of a sideways trend. Earlier the trend was positive, but as soon as the support of 21,900 breached the bears started having an upper hand. But the fall didn’t last long and the index reversed sharply, breaking above the resistance of 22,200 with a bang on Thursday.

Now, as said earlier, the trend is quite random, probably due to the uncertainty regarding the upcoming elections in the few couple of months. So what should be the ideal strategy here?

For bulls, as soon as the previous all-time high of 22,526.6 is taken out, the trend can again be deemed as positive, but not before it. Buying-the-dip strategy can also work in this kind of market, however, for that, the index needs to trade somewhere around the bottom of the range. The zone of 21,700 - 21,800 seems a good area to capitalize on a potential rally as it lowers the risk as well as compared to new longs from the current 22,300-odd levels.

Mean reversion traders can look for short-selling opportunities from higher levels by taking the stop loss of the high. The benefit of this strategy is a low-risk trade as the exit levels are near but a decent profit potential in case of a reversal from here.

A firm bearish view should take a backseat here and the market sentiments are not favoring bears at the moment.

As the trend is not clear yet, traders can go for hedged positions rather than naked longs/shorts to minimize their directional risk exposure. Options strategies such as debit and credit spreads can come in handy to play a direction with lower risks.

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X (formerly, Twitter) - Aayush Khanna

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