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See 2720-2733 as crucial Nifty support: Rajat Bose

This article was posted on Jan 15, 2009 and is filed under Market Outlook

Rajat Bose of rajatkbose.com feels 2,720-2,733 would remain a crucial support area for Nifty. “One needs to watch out whether those supports hold or it goes to test the support level at 2,700 or even lower. However, there is a possibility that this range would hold.”

He does not see the Nifty going below 2,600 immediately. “This is more of a rangebound, highly volatile kind of market. One will have to play by buying weakness and selling strength, although it is a very difficult proposition to trade.”

Here is a verbatim transcript of the exclusive interview with Rajat Bose on CNBC-TV18. Also see the accompanying video.

Q: How are you trading today? We are expecting it to be gap down. What from there?
A: Today once again I would be looking at something like a 100 point gap down. The support is at 2,733. 2,733 to about 2,720 would be a crucial support area for the Nifty. We need to see whether this support level is broken. It’s a difficult morning to trade. When we would open, we would open gap down, so there is no scope for playing short. At the same time, you cannot immediately go long. You have to forget that there was a good rally yesterday. So, now you need to watch out whether those supports hold or it goes to test the support level at 2,700 or even lower.

There is a possibility that this range between 2,733 and 2,700 would hold. We would definitely dip in sympathy but when things would settle down and the market tries to claw back once again on the upside, then you can at least look for a token long position with a strict stop placed below 2,700. This is one way of trading it. Otherwise, suppose if there is a rally and it actually fizzles out around 2,770, then you put a stop above 2,795 and play a short position. This is how you can trade.

I continue to think that we are not going to go down below 2,600 immediately. This is more of a rangebound highly volatile kind of market and you have to play by buying weakness and selling strength, although it is a very difficult proposition to trade.

Q: Can you put in that long trade at 2,715 now?
A: I would rather wait for 2,733 to be crossed and only then put that long trade because it’s very close to that 2,700 mark. Although the 2,700 support has stood as of now, there is no certainty that it would not be broken. So, I would rather wait and once it crosses 2,733 maybe that would be an occasion to try a small long trend.

Disclosure:
It is safe to assume that my clients and I may have an investment interest in the stocks or sectors discussed.

source: Moneycontrol

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