Trade Strategy for the 3rd hour of 23rd May – Election results day
After three hours of counting, BJP is clearly leading in more than 290+ seats, indicating that by the end of the day, it is likely to be in a position to form the next national Govt. on its own. The markets, in the previous hour, had consolidated a bit. However, this development of a clear majority on part of BJP, is being bought into by the markets.
As a result, all the leading indices, led by Nifty, have been making new lifetime highs. Nifty has crossed the 12000 mark. So far, the volumes continue to be below the average traded volumes of last 20 days. It is quite possible that the volumes will also come up as the news of the clear majority catches hold in market participants.
The important thing to remember, for any investor, is to be wary of getting carried away with the buying exuberance at this stage. Unless the central bank comes out with a clear dovish signal of rate cuts, the liquidity stress in the economy is like to remain.
Markets are like to take a deep breath and go for consolidation at this stage.