NIFTY View For Week 23 Feb -27 Feb
We
had indicated at a narrow range activity for last week. Nifty traded
merely in the range of 120 points. Coming week/s would be crucial for
traders as we have F&O expiry on 26th and we have Union Budget on 28th
Feb. Markets are expected the trade choppy till then. SEBI has declared
a Trading Day on the day of Budget though it’s a Saturday. High
volatility can be experienced on the Budget day.
Technical Overview: Last week Nifty made high of 8913 and low of 8793. A range of only 120 points. On weekly chart Nifty has formed a Doji. Narrow ranges and Doji pattern suggest indecision. This
way markets are expected to continue to till expiry. An anticipation of
good budget may push market up 300-400 points. But we are trading at
very crucial juncture, hence vice versa is also true. This situation
calls for cautious approach by traders.
Short Term (Few days to a Week) : I would be wise not to trade Nifty till the expiry, unless you find a favorable situation. Just Before Budget one can Buy At the Money Call Option and At the Money Put Option of Nifty. Expected high volatility can earn money in this trade.
Medium Term (Few weeks to a month): Nifty is trading with positive bias. But, We would want to wait till budget for any trade. One can Trade Nifty with a Long Straddle as suggested above.
Long Term (Few months to Year): Nifty long term up trend is intact.
View on important Sectorial Indices:
Bank Nifty may trade choppy with negative bias till expiry. It may experience high volatility during the budget.
IT index may go through a small correction. Medium term uptrend is intact. One can buy at lower level in IT stocks.
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Recommendations of the week:
Last week Target met in HDFC and PETRONET. Sl triggered in Sunpharma. Total Profit 15,925.
BHARTIARTL (Sell): Buy Bharti Airtel Ltd near 349 for a target of 342. Maintain stop loss at 355
BHEL (Buy): Buy BHEL near 275 for a target of 282. Maintain stop loss at 270
CANBK (Sell): Sell Canara Bank near 412 for target of 424. Maintain stop loss at 402
Above prices are spot prices and profit/loss calculated with 1 Futures lot
Learning Curve:
Why
Stop-loss is important in trading? A stop-loss can be physically placed
in system or it can be mentally decided. When you place stop-loss in
system, the process becomes automated. This avoids psychological barrier
of exiting in loss. That’s an advantage. But some times stop-loss order
is executed merely due to intraday volatility. After hitting the
stop-loss the stock moves in desired direction. That’s the disadvantage.
If you use the mental stop-loss, you are sure not to be victim of
intraday volatility. However there can be psychological barrier of not
exiting in loss when the stop-loss price is reached.
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