Sunday, April 29, 2012

Get Ready To Trade : Way Ahead For Indian Markets

Since 22 Feb 2012 Indian markets have been slamming the investors and traders alike. There has been total lack of direction where trend has been missing from the markets. It has been a difficult time and hence traders have been particularly frustrated. Not that investors have got any respite, but those who are not in F&O segment of the market can still claim to be relatively safe from the market mauling.

The reason for such prevailing market conditions is quite simple. The market rose at a furious pace from the lows of 20 Dec 2011 to the high of 22 Feb 2012, almost in one huge step. Nifty rose from the low of 4531 to the high of 5630, an advance of about 1100 points in just two months, which can be considered as a spectacular rise. After such a hectic move up, the market has decided to take a well deserved breather. Nifty has moved within a band of 500 points since 22 Feb 2012. Sideways movements always baffle people and test the patience of even the most professional players.

However there is good news for the traders and investors alike. This sideways movement of the markets is coming to an end. Very soon we will again have a trending market and so be ready to take advantage of the emerging trend. In the ensuing elaboration I shall be talking only about Nifty and those following other indices can co-relate to those indices.

Nifty closed at 5209 on 27 Apr 2012.  From here Nifty has a resistance at 5300. This means that I am foreseeing Nifty to rise up to 5300 level and no more in the near term. That should complete wave B of the correction that started in 20 Dec 2011. From 5300 Nifty, the wave C of the correction should begin its southwards journey  and should take Nifty to level 4950 or may be even 4820. So you can short Nifty at 5300 with a stop loss of 5350 for a target of 4850.

But in case Nifty closes above 5390 then we can go long in Nifty at 5400 for a target of 5800 with a stop loss at 5350. This to my mind is an unlikely outcome, considering all prevailing micro and macro headwinds.

I shall be back with more details as the trend unfolds. I can assure you that there are very interesting times ahead and the second half of 2012 will be very rewarding for brave-heart opportunists and contrarians. So gear up to trade the evolving trend