Relief Rally gets a kick-off: Nifty: 7948

Expiry was better of in volatility than all expected after the first three sessions of this week. Nifty, after mondays fall, continued its sell off on Tuesday and Wednesday as Brokers raised Hair cut on margin stocks to 70% which forced traders to square off its leverage Derivative positions. But on Thursday we say sustained rally and fresh buying in undervalued stocks such as Tata Steel, Tata Motors , Sun Pharma to name few from the Nifty’s 50 Basket. Internationally, China and US are playing a blame game. China blames US Fed’s rate hike fear for global sell off while US blames Yuan devaluation and slow chinese growth for sell-off. But the technical truth is , charts were already overbought around the world. We have seen a rally on MoM charts for almost two years and now its a turn for some correction. Almost all global indicies had breached 200 day average this week and saw a steep fall of almost 5-7% which has to be followed by a pull back. Indicators on daily charts are suggesting a pull back as they are highly oversold. Talking about Nifty, as i mentioned in my last post of probable rally, it has kicked off! As circled in the chart, the circled zone is cluster of many technical resistances. 1) 100 Day average:8350 2)61.8% Retracement: 8277 and 3)Gap: 8225. So as i mentioned in my last post traders could be long with targets anywhere between 8225-8350. Achieveing targets doesnt means to short but we have to wait than for a strong reversal as resistance on upside is 200 Day avg  8451. So as of now i recommend to stay long. 

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