Trading Strategy for Budget 2024: Navigating Nifty 50 Options

Trading Strategy for Budget 2024: On June 4, the announcement of election results marked a significant event. The results differed from exit poll predictions, causing the market to initially dip below 21,300. However, it soon surged, recovering with a remarkable rally of over 15% from the June 4 low.

Trading Strategy for Budget 2024: A Crucial Test for the Coalition Government”

The Union Budget 2024 is poised to be a critical assessment of the new coalition government, marking the first since 2014. Market experts highlight that this budget is highly anticipated by markets, investors, and citizens alike.

Aamar Deo Singh, Senior Vice President of Research at Angel One, anticipates a budget with a strong focus on consumption, particularly benefiting lower-income and rural populations. Expectations are high for increased social expenditure in both rural and urban areas, alongside tax relief for lower-income households. The markets are eager to see measures that will curb inflation while fostering economic growth without compromising capital investment.

June 4 was a pivotal day with the announcement of election results, which deviated from exit poll predictions. This led to a sharp initial drop in the Nifty 50 below 21,300. However, the market quickly rebounded, surpassing the previous high of approximately 23,300 and reaching near 24,500, reflecting a gain of over 15% from the June 4 low. Analysts now note that the markets are highly overbought, and the upcoming budget session will be closely monitored.

Investors are keen to learn about trading strategies for Union Budget Day 2024, which is tomorrow, Tuesday, July 23. Rupak De, Senior Technical Analyst at LKP Securities, provides insights on trading strategies, key market levels, and the most crucial sectors to watch on July 23.

Nifty 50 Support Levels:

Union Budget Day is expected to bring significant volatility. The Nifty 50 may either break out of its recent consolidation range or experience considerable fluctuations within the range. On the downside, support levels could be found at 24,500 and 24,200, where put writers hold substantial positions. On the upside, resistances are likely at 24,800 and 25,000, where call writers have notable positions, according to Rupak.

Trading Strategy:

On Union Budget Day, active traders might capitalize on the expected volatility. A decisive drop below 24,500 could lead the index towards 24,200-24,150, and a further decline below 24,150 might push it down to 23,800. Conversely, a sustained rise above 24,700 could see the index move towards 24,800, with further gains possibly reaching 25,000, as advised by De.

Trading Opportunities:

Traders should consider capitalizing on index spikes or specific stock movements following the budget announcement. However, trades should be carefully planned with set targets and stop losses, as the market is expected to be highly reactive with rapid price changes, according to Rupak.

Sectors to Watch:

On budget day, sectors with high expectations tend to be highly volatile. Positive announcements can lead to significant stock price spikes in those sectors, while disappointing news may trigger panic selling by leveraged buyers. Key sectors to watch include railways, power, housing, infrastructure, renewable energy, and fertilizers, as they typically see heightened activity around the budget.

Trading Advice:

Rupak De advises caution, stating that no stock-specific recommendations can be made before the budget. Intraday trading on budget day is generally risky, and investing all your capital on this day may not be advisable. It’s better to wait until the market stabilizes and then review the charts to make informed decisions for short-term trades or long-term investments.