Nifty 25Jan'22: Deal with the roller coaster ride

Strong selloff for the Nifty benchmark index over the last five trading sessions, during which the index on a high to low basis has lost close to 9%. The short-term trend, thanks to this selloff, has gone down but the intermediate and long-term charts are still holding on to its uptrend. We did manage to observe some bounce back from its intraday lows, and so the vital question from now on is whether we see any further bounce back or not. The best-case scenario from the current price is another 150–250 points rally, and as long as the level of 17,600 is not taken out, the selling pressure will persist. Sectoral indices like Pharmaceuticals, IT and FMCG have broken below their recent November–December lows. And on the other side, sectors like Auto and Energy are showing good relative strength . So strategically, one should continue to look for trades in either direction and for longs, preferably from those sectors which are relatively stronger.

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