Nifty Futures – Discount Turns in to a Premium … !!!
The Nifty futures opened at 5470 and reached a high of 5483 in the first half of trading on Thursday. As it found difficult to trade higher, it just hovered above the previous close and sold off in the last hour of trading. It closed at 5455 for the day. Meanwhile, the futures have returned to premium in comparison with the underlying index. Thursday’s trading has not changed the technical position of the market. As the market is not changing significantly on a day to day basis and the trading is confined to a trading range, this blog is forced repeat whatever has already been written again and again. ( It is becoming almost an occupational hazard ! ).
Even at cost of repetition, this blog is forced to write that the present day trading doesn’t inspire enough confidence in the rally, even though nobody can call a top and the grinding rally may continue. Historically, Indian and other markets have extended their rallies to irrational and unsustainable levels, only to fall to irrational bottoms. One of the best examples of an unnecessarily extended rally happened in the last quarter of the year 2007. Disposal of low quality stocks, if any, from the holdings seems to the best course of action at present. However, this do not amount to the initiation of any short positions unless triggered by fundamental or technical considerations.
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