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June 03, 2020, Trade Plan- Caution advised;Nifty overheated after 1,000-pt parabolic rise.

The market has risen nearly 1,000 points in five sessions; recording one of the steepest climbs in recent times. Volatility has declined, with volatility gauge INDIA VIX coming off 2.04 percent to 30.1150. The risk-on setup remains firmly in place, but it has made the market highly skewed in terms of risk-reward. Given this condition, investors are advised to stay away from making aggressive purchases.

With the market ending just at the resistance point, Nifty is likely to face resistance at 9,995 and 10,080 levels. Supports should come in much lower at 9,910 and 9,825 levels

Liquidity has been chasing stocks tirelessly. When a risk-on environment is firmly in place, it causes liquidity to chase assets regardless of their values. In such times, assets tend to defy technical levels. All in all, the best thing to do in the current setup is to approach the over-heated market with strict trailing stop losses in place. One needs to keep in mind that odds favor profit-taking at current levels more than ever, as Nifty has seen a parabolic up-move of nearly 1,000-points. A market that was oversold has turned overbought within no time on the short-term indicators.

Nifty Bank (20530) The crucial support to watch would be 19536 and upside if it stays above 21110 could be 20542’ the Nifty Bank unfolded as expected and achieved our target and has closed in the green…technically 20927 as long as 20110 holds…
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