nifty50: All eyes are on 18,000 on Nifty50! Stay cautious as the market is in the overbought zone: Anand James

“Recession fears continue to lurk in the shadows, but yes, current momentum could scale the 18,000k wall as rate hike fears rationalize and the market reviews yields after earnings “, declares Anand JamesChief Market Strategist at .

In an interview with ETMarkets, James said, “Oscillators are now either overbought or showing negative divergence, but they have been for some time now, which is consistent with the behavior of oscillators during strong uptrends”, Edited Excerpts :


The Nifty50 has recovered from crucial resistance levels over the past week. What led to the optimism on D-Street?
US CPI data suggests the economy is not out of the woods despite the slower CPI rise.

The discussion surfaced if this could become the pivot of policy, or if we could have seen a spike in inflation. While the jury is still out on that – the fact that it became the focal point of the conversation.

The data was swallowed by the market as a positive sign and the likelihood of a rate hike faded into the background.

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This has indeed given more weight to the market as risk appetite has improved. It wasn’t very visible in terms of price upside, but the performance near critical resistances instilled traders’ confidence.

What should be the trading strategy for the Nifty50 as it trades around 17800 levels?
The projected 2-sd range from the last 20 days is at 2000 points and Nifty is only 1.6% of the upper range. Historically, such a setup has usually led to fixes.

Oscillators are now either overbought or showing negative divergence, but have been for some time now, which is consistent with how oscillators behave during strong uptrends.

It’s such bear traps that give the uptrend more legs, with both FOMO and short cover getting involved – it’s hard to pick the top of an uptrend.

We had gone last week hoping to find signs that the 18200 trajectory would be intact or not. For this, we looked at the 17570 mark as a crucial point.

The way this was shot down last week leads us to expect that the 17750-17830 region, which has disappointed multiple uptrend attempts since November, could be shot down before targeting 18200.

VIX down sharply from 20 to 17.6 gnawed at long chokes and naked traders last week, and with the CPI figures out of the way options traders would rather stay close to the ITM, especially being a truncated week.

India celebrated its 75th Independence Day on Monday. If someone is considering going into trading, can they become financially independent? What are the key things to keep in mind before becoming a full-time trader?
It’s not about timing the market, it’s about time spent in the market that matters. This old adage cannot be overstated. As we celebrate our Independence Day on Monday, any merchant would be grateful for the progress we have made over these years, in terms of technology, access to information, payment gateways, regulation, etc. .

Compared to the days when rates and information were delayed, or when there was information asymmetry, today’s trader is happy not to have to think about these drawbacks.

Traders today face the problem of having to respond adequately and correctly to position sizing and risk management.

This is a personal issue and is rarely mastered without enough time and exposure to the market.

For a trader to be financially independent, having a two-pronged strategy could help.

The first is to have a position sizing approach that you are comfortable with.

The second is to continue to withdraw money from trade loot and invest in passive funds. This has two advantages, firstly the position sizing is also tempered, and secondly you develop the habit of having a lump sum for a rainy day.

The market recouped its losses and turned positive on a YTD basis. Do you think Nifty could recoup 18,000 in the August streak?
Recession fears continue to lurk in the shadows, but yes, current momentum could climb to the 18,000 wall as rate hike fears rationalize and the market reviews yields after earnings.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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