Nov 26, 2009

Q: How would you trade the Nifty now? Do you play for 5,300-5,400 in the December series or would you adopt a more cautious stance on the Nifty as the new series opens up?
A: You can draw a trendline from 4,550, which goes through 4,930 and has an intermediate low in this move itself. That trendline comes around 5,050. So as long as 5,050 hold’s up, there is more upside. However, once that goes then short-term traders need to be looking at the short side. When you get a narrow range at the top of a 600 point move, it is not comforting and is losing market breadth.
Unless something drastic happens, it is unlikely that it can cross these levels very easily. It seems very difficult for the market to sustain above 5,100. You would probably lighten up, use half your exposure and keep very tight stops because from here you could have a decline maybe not all the way to 4,550. However, you could go to 4,750-4,800.