Brace for a 400-point correction in Nifty: Ashwani Gujral

In a chat with ET Now, Ashwani Gujral, Fund Manager, Ashwanigujral.com, shares his view on how the market may behave in the coming sessions.

ET Now: We were already highlighting that there is downside risk to the market. We have now seen a fresh wave of selling. What do you recommend investors? How should traders approach trade on Thursday?

Ashwani Gujral: It is possible that 8,000 on Nifty which was acting as a floor till now, becomes the ceiling. All rallies towards 8,000 on Nifty should be sold if you get one.

Chances are that given the continuation of weak momentum, you will see a lower a opening on Thursday. From here, all rallies should be sold into. Traders can hedge their portfolios using derivatives. They can use lower-level puts. If they have blue chips, it is good time to average them out. Traders need to look at their stock carefully. They should not average out everything. They should average only the bluest of blue chips. Once the market turns, they will get into the money faster.

That said, it appears that there could be another 300-400 points downside on the Nifty. That will change the way a lot of stocks look. Hence, be ready for that because the downside waves that we are seeing are about 800 points. So from 8,470, if Nifty takes a 800-point hit, then it will end trading at around 7,600-7,650 levels. This wave will be completed at around 7,650. We may see a pullback then to about 8,000. That is the way, the trade will play out.