Next Move..
Now days in our stock market in respect of the broader indices Sensex and Nifty, what we observe that prevalent scattered thoughts among big and large participants of Indian Stock Market. Grossly, the view of local fund managers, DIIs replicates a confused reading of market. They do not even bother, what FIIs have been encashing to get a pie of the best of India’s growth story, a fraction of India’s consumption story. When the figures of corporate have been showing a better growth ahead, they do not care. They have capped themselves, crest their arena of looking market at a new bull run. They even do not dare to think of, how to cross the life time high of major indices.
As a result we get a gloomy and fearful environ dampening sentiments among small and retail investors. It raises doubts of Indian Growth story. The markets have experienced some pretty wild moves in the past few days, some moves like freefall in the span of a few minutes and then recouped most of those losses a few minutes later, closed on a weak note and surprised everyone with a gap higher on the following day, showing a clear vulnerability as traders rushed for the exits and showing an outstanding resolve by gapping higher and holding the gap for two days, for which there is still no clear reason.
Investors do not know what to do, as the market is transforming to a Traders’ market, even if it is not easy to trade the market.
While traders may not be able to predict the next move, it is not too early to begin preparing for an eventual outcome. Traders should be very cautious about getting too involved with the indexes as they hover just about in the middle between a possible top and possible bottom. Both levels will likely have strong emotions tied to them, so it's quite possible that the markets need to digest these moves for some time. This would lead to the indexes beginning to narrow in range as traders jockey for position. At some point, the markets will be ready to make their next move and the best traders will be prepared for a move in either direction. One way to be prepared is to start making a list of stocks for each scenario. For instance, while many are expecting the markets to head lower, it wouldn't hurt to start building a list of stocks that have weathered the recent weakness.
So should traders start loading up on short setups, or continue to buy weakness in favor of continued upside? Unfortunately, there is no clear-cut answer as the markets have thrown traders a curveball. There are certainly traders in both camps arguing their cases, but the simple truth is that no one knows the next direction, and short- to intermediate-term traders should continue to show patience and wait for the markets to reveal more clues. There should be a good trading opportunity in the near future and traders should be prepared regardless of the direction it takes.