‘Ride cautiously once Nifty breaks 3400’

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‘Ride cautiously once Nifty breaks 3400’

This article was posted on Apr 2, 2009 and is filed under Market Outlook

MUMBAI: Indian equity benchmarks have shown impressive run in the past few weeks and traders have started eyeing 4000 levels on the Nifty. However, Shrikant S. Chouhan, vice president -technical research, Kotak Securities, advises caution if Nifty breaks 3400.

Short Term View: Currently the market is “over retraced” but not “over bought” and that is why we may see temporary correction from higher levels 10470-10550 (3240/3270). However, selling is advisable only on reversal from higher levels.

Medium Term View: Medium term trend of the market turned positive above 2800 levels and since then we have not seen any major correction. As the long term trend is still negative and we are heading towards major event, our advice is to look for booking some profits on cash and raise cash levels. For traders the advice is to be flexible to trade on both the sides however, the basic view is to go long at major support levels. The level of 3150 and 3050 may act as a major support for the market.

Long Term view: Current rally seems to be long-term trend deciding rally and highest point of the rally may act as break out level in the future. The rally may retrace up to 200 days simple moving average which is around 3450. If something positive comes up after that then we may expect levels of 3700 max. However, from these levels we may see significant correction that may even retest 2800 or 2700 in coming six months. Ride cautiously above 3400 levels.

On correction one can look for stocks like Reliance Communications, SAIL, Reliance Industries, State Bank of India, BHEL and Infosys Technologies for trading as well as for investments on declines.

source: economictimes

Tags: bse, nifty, nse