May Lord Ganesha
Remove the Obstacles of your life;
Provide you with auspicious Beginnings;
Inspire you with creativity;
And bless you with intellect and wisdom!
Happy Ganesh Chaturthi!
Today I’m sharing my view on indices. You have seen last few trading sessions, there is a huge downside movement happened in all the indices specially Nifty & Banknifty. Today we’ll try to find the reason behind this.
First, we should look at the reason behind these higher highs which nifty & bank nifty made from the last couple of months.
There is no value buying in the market which might lead to this rally, We saw some buying only in some large-cap stocks like RELIANCE & HDFCBANK, As free float market capitalisation of RELIANCE & HDFCBANK is very high in NIFTY, it took NIFTY at those higher levels, But as we know at some certain levels those who are buying at lower levels, will book their profit too.
That’s why I was not convinced with that rally, In Fact, in my previous post, I indicate that nifty & banknifty both are taking resistance on higher levels and we may see some downside movement from here. Because there is no value buying in this market,
If we are looking at PE Ratio, it’s 27.64 which indicates an Overvalued Market, Usually the Indian Indices P/E ratio ranges between 16x to 20x, with an average of 18x. So this is also a big reason that we haven’t seen any good value buying in this market till now.
Now Look at the Technical Charts:-
After taking resistance at 11750, we saw a huge downside movement in nifty 11170-11070 is last hope for nifty, 11070 is also a 38.20% retracement level, close below will lead to more downside levels.
For banknifty 26550 is last hope for bulls close below will lead to 26000 & 25450. 24450 would act as a strong support if it closes below 26550 and continuous it’s journey to the downside.
Now what should be our Strategy:-
Now as we are seeing that market is in a complete downtrend so we should avoid long positions in this market, If you are still holding then we should protect those positions with a proper hedge. For your long-term portfolios just focus on fundamentally strong scripts only, avoid small caps & mid caps if your investment cycle is less than 3 years. Overall our economy is growing and we’ll get a good return in the future so just focus on fundamentally strong companies. Always do proper research before investing.
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I wish you very happy profitable trading.