WHERE IS NIFTY/ECONOMY GOING?

Goldman Sachs has downgraded Indian market. Economy is really in bad shape and very few people have any hopes of revival. The sad part: Market is bearing the brunt of that anger and frustration.

I don’t think one needs any analysis to tell what kind of market we are in. Market structurally is getting hammered on daily basis.

Here’s the daily chart of Nifty

As you can see in the chart above: Nifty has been all over all the place in last six months: Up, Down, Up and Down. You would be surprised to know that in FY14 – Nifty is still up 0.8%. So, the idea that Nifty is done with correction is completely misplaced. Nifty has not yet seen the capitulation and that makes the market more dangerous.
In trading – what matters is the direction. One cannot tell what can happen on day-2-day basis but we know that broader direction of the market is down. So, bounces can happen and market can rally for day or may be few days but eventually – market has to go down. That’s what trend does. As long as the current trend prevails: one should be careful on long side. Remember, in Bear market: Traders use rallies to go short.

Trading Rule: One should never go Long in a Bear market and One should never go short in a Bull market.
The only +ve factor for market: Global cues. But prevailing mood and sentiment on Indian market is so bad that it would be difficult for market to overcome that.