The stock market is facing increased selling pressure as investors and traders grow impatient. Recent analysis suggests that the target for booking profits by short sellers is around the 23,300–22,850 zone, while the upside trailing stop is around 25,430. Significant unwinding is expected within the first three days of the upcoming week, further shifting market dynamics.
Last week, a bearish trend was indicated, suggesting that the Thursday sell-off was both a challenge and an opportunity for investors. Technical charts, often reflecting the actions of the 90 percent who consistently lose money, showed a clear downward trend. As a result, caution was advised against anticipating support levels, which rarely signal a market bottom.
Continued price drops are expected as selling pressure mounts and new investment inflows diminish. The current market behavior suggests that the Nifty could fall an additional 700 points, although the exact timing remains uncertain. Traditionally, technical analysis guides investors through straightforward, executable strategies.
However, even during bearish phases, negative undertones in investment positions could leave traders skeptical about upcoming relief. Monday is anticipated to open higher with significant market participation, especially in high-beta and technology stocks. A positive close is highly likely, favoring STBT (Sell Today, Buy Tomorrow) strategies.
Tuesday could be deceptive for bulls, often resulting in negative moves during the first 30 minutes of trading.
Selling pressure impacts trading strategies
Depending on the initial market direction, a big move—either up or down—is possible.
BTST (Buy Today, Sell Tomorrow) is recommended. Wednesday should start flat-to-negative, presenting an opportunity for a trend reversal. A potential V-shaped recovery could make it an ideal day for buying fundamentally strong but bearish stocks.
Thursday is expected to be positive, making it a prime day for accumulation during market consolidations and reversals. Day traders could see substantial profits. A bullish outlook is anticipated for Friday, with strong momentum breakout signals.
Despite potential market volatility, trend-following systems are advisable. Quick adaptation to market shifts can prevent severe losses. Overall, the market is likely to begin bottoming out this week amid high volatility and significant movements.
Investors should consider entering markets only after second-confirmation signals. Contrarian bottom fishing, supported by solid fundamentals, is a viable strategy to explore. The views and investment tips expressed by investment experts are their own.
Consult certified experts before making any investment decisions.
