Posted By : Kishore B.S
The markets corrected today reacting to the budget. Nifty opened at 5337 and within few seconds was in negative and could not recover the whole day. Going by the budget, nothing substantial was expected from the budget. So, the disappointing budget was not a surprise. Now this is already discounted in the market. The markets should correct till 5217 to cover the gap it created last week.
If we look at the global markets, Europe is trading in red but that is not a big correction. One should keep in mind that global markets are trading at all time high levels. So, these sort of corrections are healthy for the markets. US markets are seeing levels which it saw in 2008 and without any major correction. The volatility index (VIX) being just 14.7 which indicates that volatility is extremely low in the market.
Just a few minutes back Apple announced a dividend of $2.65 and a buyback of $10 million which will be a very big boost for the market. The dollar index is also below 80 which is again a healthy indication. So, the short term perspective looks very bullish. There is strength in the market. Though there may be corrections but that is an indication of a healthy market.
I told earlier also that Nifty is in a trading range of 5200 – 5600. So, there is no need to panic for the people holding long positions. Just have patience. 5170-5200 is a very strong support markets are unlikely to break this support. All the long positions should be held patiently with a strict stop loss of 5170. This correction can be used to buy. Nifty is at the lower end of the trading range. So, the call is to go long at this point.
(Inputs Mr. Shubham Deva, An associate of Stock Market Institute, IIT Kanpur)