Bulls or Bears – Market Ahead

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CREALTH NIFTY VIEW

Nifty shed all its gains of last week in just 2 days and closed below the 50% Fibonacci retracement level of 9783, of its recent rally from 9480 to 10135 on Monday due to global tensions! It was visible on the charts as Nifty had risen last weeks without any volume & had created a triple top in hourly charts at 9940! Now the 67% Fibonacci retracement level which comes around 9680 will act as the next major support which if broken on closing basis can drag Nifty to 9400.
Nifty has formed a channel pattern since it started the rally from 9000 levels and has been following it since then. Though if Nitfy closes below 9680 then we can see bloodbath in it as the target of the channel breakdown will be 9350. One more Negative for Nifty after today’s closing is that it has broken the 50 DEMA i.e 9790 so its time to be cautious.

NIFTY STRATEGY

Our suggestion would be to follow a Sell on Rise strategy in Nifty & keep a sl of 9790 on closing basis as until & unless Nifty crosses it no short covering will be seen.

Options Strategy
Create a Bear Put Spread i.e Sell 9650 PE & Buy 9700 PE at cmp of 31 Aug expiry.

SECTORIAL VIEW

Bank Nifty, Nifty Pharma, Nifty Metal are the three sectorial indices which look very weak. Hence, in the correction these are the three indices to stay cautious on as they will be the first draggers in the downfall! As Nifty Metal and Pharma have more adverse affects on their stock prices with the global downfall hence they will be the major draggers. On the other hand FMCG sector can give small support to the market.

STOCK SPECIFIC VIEW

Bullish Stocks – Bharat Fin, CESC.
Bearish Stocks – Hindalco, Glenmark Pharma.

CREALTH SUGGESTION TO TRADERS & INVESTORS
Our suggestion to all traders will be to avoid long positions & hedge their positions by shorting the index if they take a long position in a stock. As the global tensions increase it is better to stay cautious & hedge your position as their can be a sudden gap down any day & no one will get time to cut their position on SL!
Our suggestion to investors is to stay away from mid, small cap stocks & have cash in hand to enter at lower levels as this correction was much awaited and one will get quality stocks at lower levels. So sit like a hawk to enter at lower levels and don’t just jump at current levels as more pain can be seen ahead!

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