Saturday, April 30, 2016

Indian Markets Volatile - Nifty Levels to Watch

There is a saying among market participants  " Sell in May and Go Away" . Historically month of May has been a difficult month  for investors. In this month markets generally trend lower.

It is believed that in this month big players like Fund Managers go on summer vacation. This could be one reason for apprehension that month of May will not be profitable for investors.

Here mark my word "Investors", Yes this market adage may be true for investors, but for traders every month is an opportunity.

As traders in Stock Futures, what can we expect in May 2016? To find an answer to this question, let us analyse various probable situations. In this post we will discuss possible Nifty movements.



Situation # 1  Nifty moves higher from current market price (CMP)

  • For Nifty to move higher, it has to close above 8000. That will be the first sign.
  • If Nifty closes above 8000 in 2/3 days, then we can expect 8400 as target.
  • But if Nifty takes more time to reach 8000, then target will get restricted to 8100

 Situation # 2  Nifty moves sideways from current market price (CMP)

  • If Nifty has to move sideways, the range would be between 8100 and 7700.
  • Sign for sideways movement will appear when from a sudden bounce from CMP, Nifty drops with same ferocity to 7700.
  • From 7700, Nifty then takes longer time to reach back to 8100/8000. In such a situation, Nifty will finally move up if it takes support from 100 day SMA (Simple Moving Average).
  • But Nifty will go down if Nifty does not take support from 100 day SMA

Situation # 3  Nifty moves lower from current market price (CMP)
  • For move down, first sign will be if Nifty fails to close above 7950.
  • Nifty then closes below 7700.
  • Final signal for bear market to be established, Nifty has to close below 7500.
Take notice, trade safely!