Buy Blue Chips when market turns weak

Last week, the Nifty traded in a range of 5200-5600. On Monday, we had the “nothing negative” Budget and the market went up for the week.

Technically, the reason was that the market was oversold and short. This range is unlikely to continue for a long time and is likely to break on either side, depending on global commodity prices or inflation.

Overall, it seems that the mid-cap beating is done, and, in case, of any extraordinary events, largecaps may take some beating and the market should bottom. Some people tend to call down years in the market as “bad years”.

The truth remains that buying in these down years is what makes money in the good years. A lot of blue-chips in these down years come to lower end of their valuation ranges and can be bought.

On a weekly basis, key levels for the Nifty 5484, Bank Nifty 10820, CNX IT 6785. This downtrend or cyclical bear market may be over, once the Nifty crosses 5650-5700. The key this year is not to spend all your dry period in one ‘go’.