Hello reader, hope you’re doing well. With our markets currently in a consolidation phase along with a low level of VIX, we’re likely to have the same type of price action for a little longer. Even with markets correcting quite a bit, one good thing we’re seeing here is that there isn’t a spike in VIX, but on the contrary, it has gone lower. This is one good sign and key indicator of not to worry so much about a market crash, and stay invested in stronger sectors where outperformance is visible.
Important points to note:
- More or less, the entire weakness in Nifty is among banks – other sectors looking good overall.
- Currently leading the markets are Metals, FMCG, and Pharma, while draggers are Banks (both PSU and private).
- PSU banks after a period of stellar outperformance in the previous quarter, are now cooling off, which makes prices attractive for longer term investment (SBI and Canara Bank are looking best of the lot).
- BHEL is one stock to keep an eye out for, there is a good possibility of a positive divergence play, low risk good upside bet (chart shared below).
- A good expiry trade for this week that can be played out would be both 17900 and 18000 straddles, with a slightly higher risk profile but better payoffs as the reward.
- In Nifty as well, on the smaller timeframe chart (15min/30min) we see a small breakout above 17900, and a retest. This is structurally good for charts to give more upside once weaker sectors give a good bounce as well.
As always, it’s very important to remember, proper risk management is key, and as JP Morgan himself said – “Nothing so undermines your financial judgement as the sight of your neighbour getting rich”. Have a good trading day, and may the force be with you!
Disclaimer: this post is for educational purposes only, we are not SEBI registered analysts. Trades mentioned here are not trade recommendations. Equity Investments are subject to 100% market risk, please consult your financial advisor before investing.