Market not turning, it’s a short-term bounce within a downtrend: Jai Bala

“Someone wanting to short will have to wait a little bit more, the counter trend bounce is not done yet. The shorting opportunity is going to arise once the market gets towards the resistance level of 16,500,” says Jai Bala, Chief Market, Technician, Cashthechaos.com



How would you look at the markets at these levels and do you think a short-term bounce has already happened?
When we spoke a few days ago, I had said that the market is likely to see a short-term bounce from the June lows and the market is doing exactly that and yes looking at this bounce that is close to 16,300-16.500, it seems it will just be a counter-trend bounce. It is not a change of trend.

So far the move from 15,183 has been jockeying back and forth and that is a trademark signal of a counter trend move. So this is not a change of trend; within the downtrend, this is a short-term up move.

How should one approach this market? Should one use the up move in the market to lighten position, create new position or make fresh short positions?
Yes you can trade selectively on the long side. Something like the PSU banks index is likely to be somewhere close to 2700 but the opportunity is there. It is getting slightly mature so use this opportunity to lighten up there. Short-term traders can use the bounce to short. The ideal entry point is somewhere around 16,500. Someone wanting to short will have to wait a little bit more, the counter trend bounce is not done yet. The shorting opportunity is going to arise once the market gets towards the resistance level of 16,500.

We have seen that a lot of defensive names have done well in this rally. Largecap FMCG and some of the IT names have tried to make a comeback. Can defensives outperform in a falling market?
I do not know what is going to happen but I see a period of slight underperformance for Reliance. The fact that

may not contribute, may get offset by IT. In IT, I am seeing a rally potential somewhere close to 30,000. I do not yet know how much of underperformance Reliance is going to provide but if it is going to be bigger underperformance then that it will get offset.

« Back to recommendation stories

So far I am not able to put my finger on the chart and say this is start of a reversal for the Nifty IT sector but so far it looks a little bit promising, I would like to see how the markets get around 30,000-31,000 mark for Nifty IT. Depending on how it gets there, I will decide if this is a turn for the IT sector and then decide what is going to happen to this particular question.
At the moment, let us be conservative and treat this as just a counter trend bounce. Then we can play this as a trading rally in frontline names like and TCS, expecting Infosys to touch somewhere close to 1,600 and somewhere close to 3,600.

Source link

Recent Posts

Scan to Download
ios&Android APP

Open trading account and start trading!

Join our happy customers