Let’s be optimistic for Monday trading, Market expects to go for last bounce!!!

Last week, Sensex tested the 8000 levels and the Nifty 2300 level during intra-day. Later it recovered the early losses on the back of short covering and buying by domestic institutional investors.

SEBI on Monday relaxed the creeping acquisition norms, a move seen by market men as another step to improve investor sentiment. As per this move, promoters can increase their stake up to 75 per cent through creeping acquisition, instead of 55 per cent earlier. One can look at the bulk deals during last one week and later to get a clue which all promoters are really increasing their stake.

The smart reversal in the market may have breathed some life into the bulls. But for the bull party to continue, Nifty will have to cross 3250 level, which is a key resistance. As for the support, it may now find support at 2600-2550 levels.

Retail traders have to be cautious for the following reasons, despite sharp pull back, India VIX or Volatility Index, which indicates the expected immediate volatility of the market, still remains high at 69.32. This points that Nifty may be set to witness heightened volatility.

What shall we do on monday for trading?

1. If the market opens on a flat note, traders can consider going long on Nifty future, with a stop-loss at 2550. Alternately, if the Nifty future opens with a gap up, traders can consider going short on Nifty future by keeping the stop-loss at 3250.
2. RBI has also cut interest rates may also play favorably on Nifty. While traders can consider buying 2900 call options on Nifty if market opens flat. In case of gap up opening, one should wait and buy Put Option on Nifty.

-Sandeep Jain, Technical Analysts.