MARKET OUTLOOK

Dear All,

The two events that will be driving our markets for the week are the RBI Credit Policy and the F&O expiry. These two could be clubbed with corporate results and few important global cues. If we look at the markets in broader terms through objective technical analysis, then traders should reduce their longs as there is only very limited upside or no upside with respect to the high struck by the Nifty last week. On the other hand, there is more depth seen on the downside. 

Should it mean that one should create shorts here? No, traders should wait for the cues or can act by levels to initiate their trading positions. (Go Short below 5020 with a stop loss of 5070 and add shorts at the break of every support levels). 

When there are more events markets usually maintain resilience; the true colors can be seen either pre-event or post-event. Given the scenario, in current state we expect the market to act very aggressively post the important events of this week. 

What are the odds on the events that one can expect? If we look at the traditional analysis, most of the frontliners and the Nifty are in highly overbought region. Again, traditional indicators fail to show their movement as they can remain at the same level, though prices inch up further. So, to confirm the turnaround from overbought to a selling mode, we depend on the modern studies. The readings that we observe from the same are as follows:

• There is a very limited upside for the Nifty from the current levels of 5050.
• Bank Nifty, the index that is on the radar ahead of the RBI policy is topping out and could find a strong resistance at 9710. Even in extreme scenario, the Bank Nifty  could face a resistance at 9950.
• FMCG, IT, Pharma will again prove to be defensive bets. 
• AUTO, METALS, CAPITAL GOODS, OIL&GAS will witness profit booking / selling pressure.
• Mid Caps and Small Caps could see more dumping. The stocks that rallied in recent days have good chance of coming back to their respective levels from where they rallied. 

With the aforesaid observations, it is seen that February is going to be disappointing for Long traders. This is just a warning and traders should maintain their positions with stringent stop losses. 

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Thanks and Regards 
 
Rohit Saxena

Phone No: 09899365905
Mail Id: simmi9sep@gmail.com

Losers say it is hard and impossible, but winners say it is hard but not impossible."