Nifty Prediction for tomorrow 11th May 2021 Nifty trend to remain sideways in a broad trading range. False breakouts possible which would be traps for traders.
Nifty has been grinding in a broad trading range and I do not see anything changing in the near term. Overall choppy moves will continue in a broad range. Please refer Nifty Chart enclosed below.
As shown above, in the Nifty Chart sluggish moves without momentum continue, and in the near term that won’t change so, this market won’t be good for option buyers. For option buyers to make money we need the queen of the markets which is momentum and that is lacking. Most options will just keep losing time value and thereby most traders won’t make money. I mean option buyers won’t make money in this present situation which can persist for a few more days.
Many of you have asked me what’s going on in the steel sector. So long story short. This is just the sheer effects of stimulus money that is driving LME (London Metal Exchange ) prices higher and that in turn is taking steel stocks higher. The same effects are being seen in the lumber market. We have checked Indian steel companies outputs and though there has been better pricing power demand is nowhere in the vicinity of what stock prices are suggesting.
So all this money is taking us into hyperinflation. I am not suggesting for one minute that we are already there however I do see charts and that is indicating we are heading there. So second half of the year we could see inflation rising sharply. Most central banks will hold raising rates initially as they would pronounce the inflation rise as “transitory”. However, charts are not suggesting inflation will be transitory in the second half of the year.
So if inflation does rise we are going to see a net effect of the following. Rising commodity prices will put pressure on the company’s raw material cost = lesser margins = lesser bottom line. Further inflation will reduce purchasing power for the consumers = lesser or stressed top line. Either way situation going forward does not look great from a longer-term picture. Not to mention the cost of funds will be higher so that too will take a toll on the bottom line and I do expect some increase in taxes also.
We will keep discussing this in longer-term updates for now based on my Nifty prediction choppy moves likely.
Bank Nifty Prediction for tomorrow
Bank Nifty also is drifting but looks weaker when compared to Nifty. Over the next few weeks, we could see State Bank of India moving lower for a target of 290 so on the higher side be careful here.
As usual, if you are only trading on the basis of this post please use your own risk management and then only trade. Please do not over-trade and always keep your risk in check.