Since last few posts we had been discussing about the possibility of Nifty forming a "bull trap" at 14600 levels. Now in matter of 5 trading sessions Nifty has slipped almost 1000 points to touch 13600 levels. Fall has been fast and brutal and taken most by surprise.In the previous post, when Nifty was at 14240, we had clearly mentioned -
"As a trader don't be in hurry to buy dips for now, let this weakness playout first"
Fact of the matter is we had gone ahead ahead and shorted Nifty on that day. Now moving forward, market is definitely in oversold territory and it seems its preparing itself for an ordinary budget/increase in fiscal deficit etc on D Day (1st Feb). However when pessimism is sky high even a small positive news or even absence of a negative news can prove to be a catalyst and pull markets higher. Having said this the trend definitely remains down and even though there is is no way of knowing how the markets will perform on Budget day but rest assured volatility will remain high and wild swings in prices will most likely be seen. As a trader one shouldn't expose themselves too much around such events as the wild swings can wipe your capital in no time. Always trade small and with strict stop losses.
Nifty has some good support in 13500-550 zone and it will be interesting too see if this level is breached on Monday. If it holds and Nifty climbs back over 14K levels then it will be a small positive.Even though the markets are looking attractive,e as a trader I will still wait for picture to become clearer before I start buying. From trading perspective, we had added shorts around 14300 levels and have booked most of the profits already.
Happy Trading
Nifty @ 14650 down 170 points : Continues to crash (Don't say we didn't warn you)
