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.
Thank you for following my work and please feel free to share your thoughts and suggestions.
Thanks Abhijit. I feel the IT index can recover from here and once again be the rotational bullish pillar. This is based on results, buyback announcements and business outlook and the next variant possibility. Your comments on FMCG and Pharma index are very useful and should lead to some trade ideas.
Abhijit_Paul
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@Tradarv, ... yes, the IT has been a relative out performer for a long span of time, and this recent correction is just the 1st leg down, so if there is any further weakness, it'll come after a bounce back