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Nifty | Bank Nifty | market bottom: Expect Nifty@14,000 and Bank Nifty@27,000 in July-August: Jai Bala

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“The bull market from the 2020 bottom in March is still intact and that is not going away even if the markets were this much lower. But the markets are experiencing a correction to the bull market boom. It is a very healthy correction and it takes time for the correction to play out,” says Jai BalaChief Market Technician, Cashthechaos.com.

How much is the winning by a bigger margin by BJP in UP and win in other states and how much is the fall in commodity prices which are triggering this big rally globally? Do you see it sustaining on charts?
This is just a relief rally but markets have their own endogenic ribbon. They are not impacted by external events. This is a little difficult for people to fathom but this is just a reaction coming at the right time at the right place at the right chart structure. So 16,800 is the near resistance for the Nifty. If that were to get taken out, this can be a little more pronounced. But from an overall medium term trend, the markets are looking for much lower levels over the next calendar year quarter.

By July-August, this market will be much lower but in the short term, we are going to have a little bump up and the reasons will come – peace, ceasefire, elections all those will come – but the markets are just seeing a relief rally of 16,800 more. It is a question about Bank Nifty at 37,000. If the market can extend to that level on the banking index, I am very clear that this is just a relief rally.

You are saying that the possibility that the bottom has been formed are weak and we may retest the bottom in the next coming months. In order to play this rebound, what are your calls?
I like the pharma index at this point of time. I am expecting the pharma index to scale somewhere close to 13,800 on the Nifty Pharma Index and IT although I like some pockets over there. IT is also likely to see some relief rally and beaten down names like HUL are likely to see further relief. So the focus on short term trading is in pharma, IT, and little bit of FMCG names.

What will take us down again? The point which you were making earlier was that the possibility of retesting lows exist in the system perhaps by August. What would lead that decline–short trades?
That is going to happen over a period of a few weeks to a couple of months. At the moment, from a one week’s time frame to a few weeks’ time frame the markets need to see a little bit of bounce. If you are that kind of time frame trader, you need to focus on long trade at the moment.

So the moment markets struggle around 16,800 or takes out 16,800 in terms of a little more higher push and then after that, one can consider the market going short as well. At this point of time, markets are ending short term down move and so it should be covering the shorts. Short positions mean the ideal timing out there. At the moment, be a little bit cautious about trading short positions. Let the market take out a little bit of resistance and then we can think about what will bring the market down.

On a broad level, the whole market needs to go down a lot further. This is just a sharp bull market correction. The bull market from the 2020 bottom in March is still intact and that is not going away even if the markets were this much lower. But the markets are experiencing a correction to the bull market boom. It is a very healthy correction and it takes time for the correction to play out.

This year where do you see Bank Nifty and Nifty bottom out?
I expect the banking index to bottom out around 27,000 and the Nifty somewhere around 14,000. That is the price I have for July-August and before that, we get to see one bump up and then the markets will decline.

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