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Investors should trade with caution till
the Union Budget 2022-23 is presented on February 1, 2022. The
word of caution comes after the strong market rally finally came to an end last
Friday when both benchmark indices falling sharply since last week. Nifty index
is trading below 17100 mark, While the sensex is near 58000 mark. Market is
currently witnessing higher levels of nervousness due to the upcoming budget.
Not just the Union Budget 2022 but markets are also expected to remain volatile
due to monthly derivative expiry as well i.e. on 27 January 2022. The
volatility has spiked further due to the ongoing earnings seasons. While there
are many external factors that will also weigh the market in coming session, the
nervousness ahead of the budget could lead to some sudden selloffs, leading to
further correction. In such a scenario, traders and investors should remain
cautious over the next few days, especially on the day when Union Budget 2022-2023
is presented. Markets are riding on optimism at the moment and much of it is
due to the high expectations from the upcoming budget. Generally, the market
does not give any major trend reversal ahead of the mega event; but this time,
it looks like we are going to witness yet another unprecedented behavior of the
market. Next couple of days would be quite crucial and would be interesting to
see whether markets correct further or it shows some resilience to protect it
is crucial supports 17000. Going by the developments witnessed in the
last five trading sessions, a number of analysts indicate that the market may
correct further in the near-term. Technically, Nifty has started to
form lower top, lower bottom and is witnessing profit booking declines from five
sessions. It also formed a Bearish candle on the daily scale. Now, till it
remains below 17100, weakness could be seen towards 17000-16500 levels while on
the upside key hurdle exists at 17700-18200levels. We expect a
short-term but sharp correction in the market if these expectations are not
fulfilled.
For Option Callput Derivative traders :-
If you are an option trader then you have
to be more cautious while trading in budget 2022. As we all knows its pre-budget
days so already options premiums are higher for February 2022 settlement. In
the budget session some major movement comes only if budget gives big surprise
or huge disappointment bigger are chances of your losing money Market is
smarter than most of us and it factors in obvious things. If you are taking
some call option or put option check the risk in those particular positions. Check
the risk factor i.e. how much risk you are willing to take, but that’s not enough
you need to see the VIX and how much potential the script have. People do that
depending upon how much risk you are willing to take If you take deep ITM call
the capital blocked and risk can be too high for you to handle. If you buy Far
OTM call then also you may lose all capital. For buying any option call or put
and strike rate you need to have an opinion on the stock which should be based
on Technical Research. Also time value is very important factor in option
buying. As time lapses in series you can move more towards ITM from OTM.