InvestorQ : What is your stock market strategy for the weekend on Friday, 20 November? Do you see the Nifty and Sensex bouncing or correcting further?
Niti Shenoi made post

What is your stock market strategy for the weekend on Friday, 20 November? Do you see the Nifty and Sensex bouncing or correcting further?

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diksha shah answered.
1 week ago
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The sharp correction in the Sensex by 581 points on Thursday was only waiting to happen as the markets were gradually losing breadth. Friday could see some element of caution because many speculative positions could come under strain from traders.

The markets corrected after almost a 14% rally in less than a month with the heavy weights like banks, NBFCs and realty stocks pushing the markets lower. This is more like a minor reversal of the rally and may be too early to really worry about as the rally is intact.

One thing to note is that despite the sharp fall in the indices, the VIX or the volatility index has stayed below the psychological 20-level. That would reduce the chances of any sharp correction in the Nifty from current levels and give support at around 12,500 levels.

FPIs net bought to the tune of Rs.1181 crore while DFIs sold Rs2855 crore on 19 November. Despite the correction on Thursday, the FPIs have continued to be net buyers hinting that this could be offloading positions ahead of DEC peak margining system happening.

On the subject of peak margining, there is a possibility that some trading positions may get unwound between now and end of November as the new margin penalties would get effective from the first of December. That could create some offloading volatility in markets.

In Thursday trades, the NASDAQ and the Dow were somewhat in positive while European markets like DAX, FTSE and the CAC were trading with losses. However, SGX Nifty continues to trade 40 bps higher in early trades, although Asian cues could hold the key.

One thing to note is the Credit Suisse report on credit stress. Clearly, the stress on banks from strained accounts and corporates with interest coverage lower than one has reduced drastically. This is credit positive for the banking system as a whole.

I continue to maintain that the visibility on the Nifty is there till 13,000 and on Sensex till 45,000. That was evident in the way, the market met resistance around these levels on Thursday. Friday could see some weekend offloading but look for cues on Monday.


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