Monday, May 4, 2009

NIFTY: Thumping Success on the View, Should We Book Profits Now?


The view on NIFTY has turned out to be quite on the mark and markets have rallied strongly. We did see a blip globally as well as in India due to swine flu concerns. But I had pointed out in my last post; it is just a temporary phase and markets would rally strongly from there.

Going into this rally, the one question that we need to answer is when to book profits. My earlier view still remains intact; the rally has steam to go past 4000 on the NIFTY. That would be another 10% from here.

However, as we get closer to our target from here, the upward pressure will weaken and market is likely to get choppy. High volatility is definitely on the card.

To Book or not to Book?

I think part profit taking is justified from here. It is difficult to predict the exact path of the market from here and there may be a pause for one or two sessions before the course is resumed. There may be a re-entry point available at a lower level on such a day. At the same time, the market may simply carry on and you may regret getting out of positions. Under such circumstances, lightening your position makes sense as you still keep a finger in the pie if the trend simply continues.

Hence, if you are itching to do something and cannot sit tight, take part profits. Re-enter if the market does test 3550.


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