Thursday, February 1, 2018

How to do trade Nifty post Budget?

Nifty had a volatile movement today and it was much eventful as expected. We were expecting a move of around 170 points anyways and mentioned that in our morning research report. We also pointed out that Capital gains can result into negative surprises!
Interestingly after the long term capital gain announcement Nifty reacted sharply lower and touched intraday low near 10879 but recovered back sharply towards 11117 levels before finally closing near previous close. On previous occasions as well we have seen similar behavior where prices will gyrate all over the place but settles where it opens!
Food for thought: Despite such huge negative news there was a strong recovery which seems like a planned action after the event. It is just a speculative idea but government would have expected a collapse if markets are not supported post introduction of capital gains.
Let us look at the below chart of Nifty and we were expecting during the day with the upside target given clearly today morning!
Nifty 60 mins chart: as per chart published on 1st February 2018 before markets opened

Happened as of 1st  February 2018 post Budget

Following is a gist of the research published on 1st February 2018
Elliott Wave analysis:
Anticipated– “Over past we have seen that Budget acts as reversal of trend atleast over short term. This time it is little tricky as over past two days we are seeing a correction and looking at that there can be minor positive reversal which can result into retest of highs around 11130 levels on upside. On downside 10920 can act as an important support. Also past data shows that between highs and lows we have seen an average movement of around 170 points. So going by that logic there is possibility that we can see a move towards 10970 – 10940 and then a pullback towards 11130 levels…..As the fall of past two days is overlapping without any momentum we might see positivity or at least a retest of 11120 levels.
Happened : Nifty moved precisely as expected. On downside the projection did overshoot because of the long term capital gain but then the buying was seen precisely towards 11117. We cannot be more accurate than this on an event day. Prices moved lower and then rallied to retest the levels mentioned in the morning research report.
So what is next from here?
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