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Below are Views On January series ends in the red, Nifty sheds 1000 points in five sessions By Sameet Chavan, Angel Broking

“We had a weak session yesterday to snap all monthly gains and eventually closed below 14000 for the first time in the new year. Since last 3-4 sessions, our markets looked nervous but it wasn’t due to the global markets. Last night for the first time, US and European markets had a meaningful correction and hence, we reacted this morning by a decent gap down opening around 13800. During the session, the losses extended to sneak towards 13700; but fortunately due to some late recovery in the banking space, the Nifty managed to recover some ground to conclude the January series on a negative note.

In last five trading sessions, Nifty has lost more than 1000 points which in percentage terms can be seen as 7% cut. Undoubtedly, it’s a meaningful correction in such  a short span; but if we compare it with the gigantic relentless rally in last three months, it appears very miniscule, in fact was much needed also. We advocated caution consistently in last 300-400 points rally and looking at the 3-points ‘Negative Divergence’ at new high, hinted towards the possible correction as well. The strategy seemed to have worked well now; but if we look at the near term chart structure, it looks a bit distorted, which does not bode well for the short term optimist traders. Now we are just one session away from the mega event, Union Budget and the way we are placed, things have become tricky for both counterparties (Bulls and Bears). Purely looking at the chart, the trend is likely to remain downwards as long as Nifty stays below 14200 – 14300. Any short term bounce towards these levels is likely to get sold into. On the other side, there is a cluster of supports around 13700 – 13500. For a time being, we expect the index to gyrate within this range with lot of stock specific moves.

At this juncture, we do not advice aggressive bets on the short side, rather we are likely to see stock specific trades on both sides. Traders should look to identify such potential themes and position accordingly by following strict stop losses. The way banking had a smart rebound in the last hour, all eyes would be on this space, which would provide some direction to Nifty. For the coming session, 13900 followed by 14000 is to be seen as immediate hurdles; whereas on the downside, 13750 – 13700 should provide some support. The coming session is likely be less volatile and we do not expect a bigger move on either sides one day ahead of the Budget.”

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