Hello,
On the bank of a strong US Futures / Europe, Nifty supported hugely by the Banks rallied and is once again testing the higher ranges of the 5350 - 5475 range that we seem to have got stuck into. While yesterday's rally was pretty good, we still have to move another 40 points before we get a breakout that has been evading us for some time now.
FII's have continued to buy significant amounts of equity in the Indian market though its impact has been much lower than in previous times due to counter selling by local institutions but the current log jam cannot continue indefinitely. At some point either the DII's will join the party and FII's will turnaround to start selling off. Either way that should give us a breakout / breakdown of the range we are currently trading in. Despite yesterdays move seemingly strong, Advancer to Decliners were at 852 : 482 indicating that participation was not across the board and there is still a large segment of the market that is yet to participate fully.
There are two ways to trade the market. One is to trade using Mean Reversion wherein we Buy near the lows of the range and Sell /Short at the top of the range or wait for the market to decisively move either way before initiating any positions. Either way, its important to have a stop loss in place to account for the unknowns.
Regards
Prashanth
Mythri Stocks & Shares Pvt Ltd.,
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