Do not Short the Open Monday - AP

In spite of the selloff on Friday, nothing much has changed on the chart and the levels that were posted over the last weekend. In fact, Nifty is exactly following the script that was written for it.

If one refers the chart and the levels that were posted on the July 7, it can be seen that Nifty hit the first target mentioned and is retracing now. The first target mentioned was 4190-4200, and Nifty did a freak high at 4215; the traded high was 4203.6. (It cannot get much closer than this on targets)

Now, what next. A gap-down opening on Monday is possible, thanks to the weak IIP numbers, as well as the selloff in US markets. As a matter of fact, Nifty stopped its fall on Friday, exactly filling the gap it had created in the preceding days (see chart). Such gap-filling is not bad at all.

Please do not short at open on Monday.

As long as Nifty does not go below 3930-3950, it has good chances of bouncing back, and one can buy Nifty 4000- or 4100-strike calls, with a stop of 3880 (risk in the option call will be less than Rs 40, whereas reward can be far higher.

I will update this trading position on a regular basis every day.

Happy trading till then.