He recommends using any uptick towards 25,800–26,300 to exit or short positions.
The Indian equity markets may be headed for a deeper correction, according to Varun Bhargav of Profit X Research.
He maintains a “Sell on Rise” stance on the Nifty and believes that the index is entering a distribution phase, not a sustainable uptrend. Over the next few months, if the global macro-economic situation worsens, Bhargav warns of a potential breakdown to as low as 21,500.
Looking Ahead
Over the next few months, he expects the Nifty to trade within a broad range of 25,800 – 26,300 on the upside and within 23,500 – 21,500 (breakdown level) on the downside.
Bhargav added that this consolidation is likely to persist temporarily before a decisive breakdown, triggered by global macroeconomic shocks.
The triggers could stem from rising U.S. bond yields and Treasury supply stress, fiscal tightening, and liquidity withdrawal. Additionally, weakening global trade flows and tariff escalation, as well as China’s economic stagnation leading to a global tech demand contraction, could potentially act as market triggers.
He expects the Nifty to test much lower levels within the next 2–6 months, especially if the current macro backdrop deteriorates further. Bhargav cautioned that relief rallies were not sustainable, and participants must remain cautious.
Trade Strategy: Sell Into Strength
The recommended strategy is to use any upmove towards 25,800–26,300 to trim or short positions. He added that traders must avoid blind dips as they are not buying opportunities in this current environment.
Leverage, particularly in the IT, tech, and high-beta sectors, must be avoided. And traders should instead focus on capital preservation and conservative capital allocation.
Bhargav concluded that overall, this market was not suitable for a ‘buy-on-dip’ outlook but rather a ‘sell-on-every-rise’ phase, driven by weakening fundamentals, overstretched valuations, and deteriorating global liquidity. He urged investors to remain defensive, closely monitor macroeconomic developments, and protect their capital.
What Is The Retail Mood?
Data on Stocktwits shows that retail sentiment has been hovering around ‘bearish’ for a few weeks.
Nifty index has risen 5% year-to-date (YTD).
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