We have been watching violent movements in stock market during last three trading sessions, especially today. Other emerging Asian markets are also showing the same trend. This probably shows that market has reached its peak and showing signs of nervousness. Here are some important points to be considered.
1) Quarterly result season is also very near. Advance tax payments show that companies are doing well. But there is a rule ‘Buy on expectations and sell on news’. The phenomenal rise shows that every good news has already been factored in and it is expected that investors and traders would turn bears any day before the start of the result season and start booking profits.
2) However, there is no written rule and not even the wisest of analysts can predict the peak of the market when it will take a corrective course. Stock market has risen by 30% in one month and continuously rising for last 11 trading sessions. This rise is extraordinary but abnormal and defies all logics though corporate growth is excellent.
3) There are leveraged F & O positions and once bulls turn bears, long covering may bring heavy corrections.
4) Another point to be noted is that there is no general euphoria and only selective stocks are rising and their valuations have become expensive compared to Asian peers. Although, Nifty rose by around 200 points and Sensex by 500 points today but the market breadth or Advance/Decline ratio was negative at 2:3, which is absolutely discouraging.
5) To my mind, considering above points, up side seems to be very limited. Therefore, it is time for the investors to start booking profits in 2-3 installments,sit on Cash & wait for the correction & opportunities for reinvestment in several installments. And, it is comparatively better for the traders to be bearish if the market opens on the higher side.
6) However, factors like the behaviour of American, European and Asian markets may also be taken into account while trading.
We are Advising you all to Accumulate Nifty 4900 October Put at Every Decline Feom Current Levels.Cmp Rs 58.Target 120/180 by Month end.
We have got a Target of 4930/4800 within this month only.If Nifty Can rise 1200+ points in 40+ Trading Sessions only then it is expected to shed 300-400 points easily by way of profit taking/correction.
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