The day after last week’s Thursday thunder was quiet after an initial burst driven by euphoria. On Friday, the Nifty crossed the psychological 23,000 mark, and fell flat after the initial round of celebrations.
Friday’s (and the weekend) pause, before the beginning of the most crucial week in the run up to the last lap of the elections, can be interpreted in two ways.
One, caution is back after the news of RBI’s Rs 2 lakh crore dividend to the government played its part in refuelling the rally. This news has been discounted for now, accompanied by traders hunting to make a quick buck.
Two, it’s too early to take the plunge and go long. What we now have are only assurances. The gap between words and the outcome is still 6 trading sessions away. Even the most optimistic and the most aggressive smart trader will not dare take big bets.
The market is at cross-roads and the risks are to be weighed on what one wants to believe. There’s plenty of ammunition, but no wants to use the fire power. What are the risks and how will it play out.
Option 1: Sell now and buy later. But when? Around noon, on the 4th of June. Looks obvious. But this is fraught with the risk of what if you miss out – popularly known as the FOMO (fear of missing out) factor.
Option 2: Buy now, go with the popular belief that there would be no surprises on the 4th of June. This is also not without risk. The risk here is high valuation. Rather, very high valuation. It’s not about the election outcome, it’s about the limited upside given a series of events post results. The govt formation, RBI Policy and the full budget. And, it will be time to look at the monsoon prediction.
Option 3: Buy on dips, if it does happen. It could be thin. This is for the trader of the intra-day type.
So, what should one do. Tune in to NDTV Profit.
Muralidhar Swaminathan is the Managing Editor at NDTV Profit.
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