NIFTY for 3rd February

NSE:NIFTY   Nifty 50 Index
Why did the market fall so much? This must be question on everybody’s mind yesterday.Well let’s see what market was expecting?
1) Abolition of LTCG. 2) Abolition of DDT. 3) Some Relief to people in general by reducing Personal income tax burden.
What was delivered by FM:
1) LTCG remains and so does STT– Big disappointment for market.
2) DDT scrapped for Companies but individual recipients to pay tax as per eligible tax slab.
3) Personal income tax -Bad tweaking. Made it more confusing by making more slabs. For higher incomes new format, if opted, may result in higher tax outgo.
4) No relief for real estate sector (highest fall in sectoral indices).
Apart from this there was no clear reason why and how demand will be revived. Add to that the looming fear of corona virus on world markets. China is reporting more than 300 deaths and one study by Lancet (most respected medical journal in the world) pegs infected cases in China to nearly 75000, much above what Chinese authorities are saying. So here was the perfect recipe for big fall. Please check my video posted on youtube under channel name Market Movers India for slightly more analytical content. FIIS were net Sellers by around 1200 Crs and DIIs were net buyers by around 36 Crs . Option chain data yet is inconclusive and it should populate tomorrow and then we may get better picture.
Now what would happen tomorrow? We will take cues from Asian markets for our opening but thereafter it seems we should recover some lost ground. Now why do I think that Nifty will rise? Again 3 reasons-
1) Nifty is at 200 DEMA which should act as bouncing back level
2) Nifty is outside the Bollinger Band and hence buying would emerge.
3) RSI is at 30.13- at the edge of oversold level.
So then where does one book profit? somewhere around 11825.
All the best. Happy trading.