The move in NIFTY was expected. And those who have already attended my courses or those who track Nifty closely, must have already guessed - Positive Divergence in the Nifty.
This has occurred before the 'No-Confidence Vote' and my expectation is that Monday too should be positive. However in that rise it would be well prudent to book profits and go on the sidelines. Markets, when they rise before an event, usually tend to reverse even if the outcome of the event is positive for it! So be careful. .
Also political events tend to be temporary as regarding the markets. In the overall scenario, it is the economic situation which is important.
The current rise could get terminated before or near 4370-4400 levels. Technically, the divergence will get completed by that time.
I would not want to consider this positive divergence in the Nifty / Sensex as a sign of 'trend reversal' since major trends usually don't change so fast. A correction of a four year rally generally doesn't get reversed in 6 months.
So take advantage of the up move and keep booking profits. As they say "One in the hand is better than two in the bushes"
CA Rajiv D Khatlawala
3 comments:
Hello Rajiv,
I'm bit confused after reading today's write-up.
In one of the paragraphas you say that since market has moved up before an event, it is better to book profits and go on sidelines because market might reverse the trend even if the outcome of the event is +ve.
In the other paragraph, you say that current rise could get terminated before or near 4370/4400.
Are you trying to say that -
1) Book profits before the event and don't wait for 4370/4400 (because they may not come) OR
2) Book profits before the event and re-enter after the event (irrespective of the outcome of the event) for the target of 4370/4400 OR
3) 4370/4400 will be achieved before the event and hence book profits and go on sidelines(!!!!!) :)
I would appreciate if you could clarify my doubts.
Thanks in advance.
With Regards,
My contention is that, considering the +ve divergence on the RSI an upmove before the event was likely.
This upmove has a maximum target of 4370-4400 which in all probabilities can come before the event or on the volatile day of the event.
Market euphoria and short covering can take it to that level and hence once this is reached, it will be prudent for investors / traders to book profit and go on the sideline.
Thus the 3rd alternative (as pointed out by you) is a possibility.
Keeping our fingers crossed
CA Rajiv D Khatlawala
Wow !!!!!
Thanks for the clarification, Mr. Rajiv.
Let us see, what is in store for us on coming Monday/Tuesday. Nail biting days !!!
With Regards,
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