Today, Nifty Future could not cross the level of 4500 as the budget provisions were not perceived to be market friendly and Nifty future close about 270 points (-6.10%) lower than the previous day. Today is one more instance which confirmed that markets always tend to over react whether it be upside (read 18th May) or downside.
As shown in the attached chart, Nifty Future has good support at 4000 levels. At this level one can buy Nifty future with stop loss of 3950 or 4100 Call depending on traders risk profile. For tomorrow, it will be better to wait for lower levels of 4000 (+ or – 25 points) before venturing to buy. On upper side 4220 and 4300 will act as resistance.
RELIANCE FUTURE: Weakness of past few days in Reliance, led to quick and large fall in the indices. However, with today’s fall Reliance has reached close to its important support level. If it is available around 1800-1815 levels tomorrow, it would be good level to buy, with stop loss of 1775. Above 1910, it can go up to 1950 and 2000 which will act as resistance levels.
INFOSYS FUTURE: It closed near its Trend Line as shown in the attached chart. As one of the major beneficiary from the budget due to removal of FBT it has good chance of bounce back. If in the early trades tomorrow it is available around 1730, it can be bought with stop loss of 1695.
On the Nifty Chart you will find that Neck Line of bearish Head & Shoulder pattern has been broken at 4191 levels and thus many people have become bearish. The downside target as per this pattern is 3600. However, I would like to caution, that as per the H & S pattern if the price goes back above the Neck Line(4191) in the coming days, then there is a possibility of market making new Top i.e. above 4703. As of today I will give only about 10% chance of this happening. Today’s market has once again given message to the investors that if you sell at higher levels you can always replace the stock on day’s when market reacts sharply. It may still not be late to sell at every rise and wait for lower levels to buy. With such a major event like Budget behind us, all other factors viz. valuations, US markets etc. will now come to play. I have given above levels mainly for trading purposes only.
With best Wishes,
Ketan Asher.
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