Wednesday, June 16, 2010

The Five Day Rally

A blistering rally in the Nifty has seen gains of over 250 points in five days. To see this in perspective, the Index gained about 5% in five days, as compared to a bank deposit which fetches 7% in a year. The gains are a lot.

It is fair to assume that momentum will fall. But the gains may well continue with the Index inching its way up, adding a few points every day. Thus, Index action could be a trap for short sellers. There is always a caveat to our analysis. Volatile markets can do anything, therefore our scenario may face difficulties in case of sudden news flow.

All of us have our eyes fixed on a resistance zone between 5300 to 5400. Many fundamental analysts believe that the Index does not have the strength to overcome this resistance. But, who knows. The trend is up, so we assume that markets will reward bulls. That's the way, short term traders should plan.

1 comment:

kk said...

RESPECTED SIR
TODAY YOU WROTE A 5% RETURN IN 5 DAYS AND 7% IN 365 DAYS .THE DIFFERENCE MAY BE RISK. BUT ARE YOU A BUYER NOW?.

LEAVING TECHNICALS ASIDE , IF WE ONLY CONSIDER VALUE , NOW NIFTY IS NOT AT A P/E OF 20 . IT'S ACTUALLY 10% HIGHER . AND HDFC BANK TOO AT 28.
AS YOU SAID ON 8th JUNE , IF THE MARKET CONTINUES TO MOVE UP , YOU WILL NOT BE A BUYER BECAUSE YOU ARE GETTING 7.25% IN 365 DAYS.
WAITING FOR YOUR COMMENTS.