The broader market Nifty 50 index has risen for the 4th consecutive session on Monday, gaining 74 points to 23,365, by 2:42 PM IST, retracing a bit from the all-time high of 23,411.9. The previous new high was made just before the 2024 Lok Sabha elections, after which the markets nosedived in a jiffy.
However, as the political scenario is getting clearer day by day, the market participants are returning to bet on the growing India story, the result of which is a new high today. But will this rally be sustained or going short from these levels could be a better opportunity?
Well, firstly India VIX has fallen drastically, from a peak of 31.71 to 16.2, which is a massive 48.9% decline in a matter of a few days. Hence, the movement in Nifty 50 is not expected to be large now especially what we’ve seen in the recent past. So in either direction, traders should not expect very aggressive moves.
Secondly, the continuous rally from the last 4 sessions has pushed the index approximately 1,472 points towards the north. This one-way move seems a bit stretched especially for a large-cap index. Therefore, a healthy retracement should not surprise traders, which could probably throw the index a few 100 points lower.
As both the fall and the rise were quite sharp, there were no support levels that were being made by the market. The nearest support is present at 21,700 - 21,800 but that does not mean we will see a correction to this level. It just means that a closer support level is not clearly visible which could make it difficul to buy the dip. This is a good strategy because undoubtedly the broader trend is quite positive.
However, due to a strong one-way move a cool-off in prices is expected, and therefore buying at the current levels is not recommended. Waiting to see till where the market corrects and rebounds will further decide the buying zone.
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X (formerly, Twitter) - Aayush Khanna