4th Sept 2020 Guidance

Most of the traders might have had sleepless nights tonight, specially the ones who are carrying overnight positions. I had clearly told people to refrain from carrying any overnight index positions that too specifically till the time either the upper range of 11,550 is broken or the lower range of 11,400 is broken. However 2 things I would like to tell most of the traders out there.

1. DO NOT PANIC. I have told many times this to people in this group. We survived the great depression, we survived the 2009 great recession, now we have passed the 2020 Corona pandemic sell off hence this type of 100-150 points gap down is nothing to get scared of. Recently I have already asked people to stay light in even cash positions. Hence I believe people are adhering to that. If not then you can still do that. The simplest way to do that is to cut your cash positions by 50%. If market falls you will have enough liquidity to re invest and be happy that you saved 50% of your money which you can use to buy from a bit lower level. If the market rises from these levels you will be happy that you kept 50% positions for yourself and carry some profits. So it will be a win win situation for you. However I still do not see any reason for Panic to roll in. I can see the Nifty resuming the weekly trendline, so there can be some sideways trend for next few weeks in some range bound movement of 4-500 points.

2. Keep your eyes US Futures. This is for the Index traders. Keep your eyes on US futures through the day to see whether a follow up selling comes up or not. Once we find some stability there we can expect sanity to be restored in Indian markets and some buying to resume from lower levels. However I would clearly suggest people to not to pre anticipate people for this and I would suggest small intraday traders to stay away.

In all cases the first hour remains the most critical for everyone for trading. DO NOT ENTER ANY TRADE dring this time and just keep a strong watch and be very very stock specific. The important levels to watch out for today would be 11,330 which is the most critical of all levels. If this is taken away then 11,230 cold come in a jiffy. The next important support for positional traders could come in at 11,111 which I believe could be held onto even if there is a major fall in the index. However, honestly I am not expecting the index to fall so much, but in the end it is markets and only markets can decide where it wants to go and we can just follow the flow.

The immediate support level for #Nifty is 11,400 which could be the point where we might be just opening today. If this support is held during the first half then we might be in for a second half buying. DO NOT buy into the gap down immediately.

For #BankNifty, clear weakness has come in. As I had already said in previous few days that if any rally comes it will be only a short covering rally and there is still not major interest in banking shares from the broader market sentiment. So better to avoid this index. Even in case there is a fall, this could be the best index to short. However stay safe and stay clear from buying options in this segment as it can give serious damage to your portfolio.

All in all, DO NOT PANIC and also DO NOT SPREAD PANIC. Always remember that Trading is more a game of managing your mind than anything else. The better you can keep your emotions under control the better you will be able to trade. The end idea remains that to win in this game, you have to be in the game. So even after minor losses if you cope up, in the longer term you can make good profits. So Don't panic and relax and just keep watching from a distance.

Have a safe day and a superb Weekend.