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Tuesday, September 27, 2022

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Bigger Trends At Make-Or-Break Stage


Strategy

People get unnecessarily worked up with targets. A target of 17,200, for example, suddenly looks dire bearish when it is really not. Most times the journey towards a target gets covered in gaps and there is nothing that can be done about it too. When markets make a turn, one has to step back and take a bigger view. A drop to a lower support need not mean a trend reversal, even in the short term. If you were playing the short term, then it is also your job to keep taking profits as the market goes higher. Obviously, the last in position will give you losses and those have to be accepted. Its just part of the game.

With 17,000 levels as a decent support zone, one should look at the positions one holds. If they are stocks that are in a sound up trend, then one need not fear any major damage. But if you have been foolish enough to get into poor quality stocks then you deserve to take a hit. That’s just the way it is. So, if next week is soft, then look at the quality of the trend of your longs and take a decision. Intermediate and long-term trends will remain undisturbed so, for such players, a drop in the short term could be a welcome opportunity to buy or add.

Bank Nifty outperformance with the Nifty is likely to persist ahead too, hence one can continue the approach of trading in the former and looking at big bank stocks (particularly SBI and ICICI) for cues.

Having made it to second-richest man, Adani Group stocks are unlikely to surrender levels and jeopardise the man’s status. So dips in the group will still be supported. Elon Musk is slightly beyond but that doesn’t mean that Gautam Adani is not going to try for that title. Adani Enterprises Ltd. is entering the Nifty at the end of the month—so like it or not, passive Nifty funds and ETFs, etc. will be forced to buy the stock. The promoter buying 5L shares last week only makes that aspect even more compelling.

Remember the ‘decoupling’ theory that is gaining ground. It should help stem declines emerging out of global triggers. So not to get panicked into any precipitate action.

This phase may see some interest shifting towards mid caps. So, those with investing funds should pay more attention there.

The bigger trends are placed at a make-or-break situation. The ‘break’ part of it may be more of consolidation than declines. So be alert for those and lighten up longs if it occurs. If Nifty ‘makes’ it, then turn aggressive on long side too.

Until next week, over and out.





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