The downward flow of Indian stock market which started with the Budget speech, made worse by US market crash, is still going on.
Though the market has recovered around 150 points from low of the day, there is still uncertainty about current trend.
The low of the day for NIFTY was 10295.15, a good 371 points from the close of the day yesterday (5th Feb 2018).
After staying there for a couple of hours, the market recovered around half of this fall and closed -172 at 10494.20.
What to do?
As mentioned several times on this site, reasons don’t matter for long. All that matters is what price and volume are saying.
And the price movement right now is saying that market is still not out of woods. [Will post an updated chart with the trading view before tomorrow morning.]
This healthy correction was long overdue. Without such corrections, the market won’t be able to digest all the growth.
Now, that this fall has digested ( or has it) the populist budget measures, USA market fall (biggest ever in last 6 1/2 years), it will need to show consolidation at the current level to make it clear that the correction is over.
Or it is just a break and market will continue its fall.
Thus, what to do? If already short, book some and update stop loss to rest of the position. If not short, wait. Don’t go long.
Uday Kotak talking about small-cap bubble:
In an interview on 16th January 2018, Uday Kotak had warned about a bubble in small cap:
“Money is coming to a broad funnel and it’s going into a narrow pipe where massive amount of Indian savers’ money is now going into a few hundred stocks,” Uday Kotak to BusinessLine
Well, now that fall has happened this seems like a good read. You have to read these talks for purpose of being aware of anything that keeps you alert about your trading position.
The reality that is going to help you is that, when you are trading, you trade with a trading plan. Not the viewpoint of experts. They know what they are saying, you should know what you are doing.
If the market falls more, it won’t be without breaks and when it starts to get up, it won’t be without its own consolidation.
So, wait and watch.
How much should I wait?
Right now there is no clear formation on the chart.
So wait till you get a clear formation and clearer reasonable stop loss on the chart.
[Will post on tomorrow morning before the market opens].
It can be tomorrow or it can be next week. The main point is that unless you have an entry that you understand, it will be a trade which you will not be able to take benefit from.
Would like to know what is your view about current market sentiments? Please share in the comment section below.
Till then, keep waiting and keep an alert watch 🙂