Market Update for Monday : Are we in for another 3-4% fall today? – HBJ Team Says, “Yes, market will slide but one can expect some shortcovering too”.

After friday's freefall, the biggest question in the mind of every trader or investors is what next? Is monday or the complete week is going to see the selling pressure? Our team analysed the current situation and came up with conclusion that except some shortcovering, small duration bounce back, in general Indian market are going to move inline with global especially US. And for US, this week is not going to be great, DOW will fall for the next 3 days until their meeting on Oct 29th (US Federal Reserve meet).

No govt help like rate cut or liquidity supply will help untill unless our govt comes up with stronger major like Sovereign Funds etc. So, one should stay with the trend and the trend is downward.

Last week a spectacular global crash led to double-digit losses in the markets. Naturally that meant a new set of two-year lows. The Nifty was down 15.9 percent closing at 2,584 points while the Sensex lost 12.8 per. The rupee dropped to its lowest-ever levels versus the dollar, going below the Rs 50 mark.

The downtrend has far exceeded target projections. This week sees a truncated settlement and the likelihood of short covering. There could be a spectacular but short-lived recovery, pushing prices back to the 2,800-3,000 level. On the downside, if selling continues, the market could bottom at 2,400. Assume the range of 2,400-3,000 could be traversed.

Next week has two effective sessions to settlement since Diwali trading is symbolic. There’s a lot of short interest, which will be covered.

Despite a positive opening for the markets, bears had the last laugh as markets swooned under selling pressure to touch its three-year lows. Predictably, even the Nifty future breached its all-important technical support levels during the week. Both the Nifty October and November futures closed with a huge discount to the spot, which suggests that despite the steep fall, a chunk of the short positions may have been rolled over to November month. So far, about 40 per cent of Nifty positions have been rolled over to November series.

Recommendation :

1. Retail traders are better off staying away from markets given the sharp intra-day swings that can wipe away gains in no time.
2. However, traders with a high risk appetite can consider a straddle strategy. This can be set by buying Nifty November 2750-call and put. The maximum loss would be limited to the premium paid, whereas the profit can be unlimited if the underlying makes the desired movement.

-HBJ Team