Nifty on Monthly charts indicating big break out.
Nifty break out above the trend line which was joining tops of 2010 and 2015. A channel break out is also visible. Technical targets of that break out is just amazing another 2000 points, viz. 13000.
The 100% extension of this wave is around 11356 and 138.2 % extension is 12211.
So still lots of steam left in this rally. Stocks which have not participated till now can be the leader of this rally. These stocks include PSU banks and Pharma stocks.
All PSU stocks can be a good bet for this leg.
FIIs recent buy figures also support this assumption.
Look at the huge buying figures by FIIs in this month. Approximately 18600 crores stocks have been bought by them(including both cash and futures).
Now coming to short term picture. In short term Nifty is extremely overbought position. Any time we can see a correction of 5-7%. A move to 10600 is needed to cool-off this rally.
Maximum correction which can happen is 10250, but that will be an excellent buying opportunity.
That is why i was telling to buy puts of Nifty to hedge your portfolio. These puts are just to hedge against this correction.
Disclosure: I am not a SEBI certified analyst so please consult your financial adviser before acting on this call. Further i do not hold any position in Nifty/BankNifty futures. However holding some puts.
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