This morning there is a good chance that the market which trapped a lot of long traders yesterday, does trap some short traders in today's trade especially if the SGX Nifty, which is indicating a bit of a gap up, if that builds on. If you get 10 or 15 points more than what the SGX Nifty is indicating, in that case there is good chance that yesterday's shorts get trapped.
There are two things. One, the 20 day moving average has been coming lower while the 50 day moving average has been inching upwards. So the consolidation has allowed the two averages to catch-up and yesterday's low was right in between the two averages and in that case with you being in a bull market, it is a classical theory of market finding support between these two averages and moving on.
The second important point for me which could really work today, while yesterday there was a lot of foreign institutional investors (FIIs) selling; there was no domestic institutional investors (DIIs) participation to support that and today there is a good chance that there is some short covering because yesterday a lot of FIIs went short.
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