Overview
The Finance Minister announced Corporate Tax rate cut on Friday 20th Sept 2019 at 10 AM. This was received well by market. Corporate tax rate cut means Companies have to pay less tax and it will increase their Profitability assuming sales and expenditure remains the same.
It improved sentiment in market. The market roared and jumped more than 5% on Friday making it one of the best days of the year.
Monday on 23rd Sept 2019 market extended the gain. Many predicted this to be complete reversal of trend. Note people also posted targets like 10% jump in Nifty. As in 1997 Nifty continually rose and have more than 14% gain due to Corporate rate cut.
My Interpretation on Monday
Everyone was buzzing in the market and I realized by market movement that people are becoming greedy and getting complacent that Market will continue to rise till expiry and beyond.
Below are my tweets reflecting the mental state of market after market hours on Monday. I clearly said that Nifty will not have clear direction and it hold true on Tuesday.
I also warned people that be careful and do not get tempted for more upside.
How Nifty behaved post warning?
Nifty created a Doji (no decision) on Tuesday 24th Sept. There was no positive or negative movement on Nifty that day. The following day on 25th Sept it gave negative movement.
So anyone who traded for positive movement on Nifty or other stocks had to book loss. This is why I warned against trade. It is always better not to trade if things are not clear.
Note capital protection is also important aspect of trading. Quality of trade matters not Quantity of it. This simple principle is often overlooked.
Conclusion
This is first article of series I am planning to start. I am planning to write market wrap up. It may not be daily but I would try to cover on important days to keep you informed
Note Market had negative trend before Corporate tax cut announcement. There are negative news on Thomas Cook and PMC. Markets will be range bound with Indecision.
Corporate results are also awaited in Oct month. The festive season is very important to decide market direction along with Corporate results.
I will keep you all posted.