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Afzal Lokhandwala: Sharp market bounces are traps within downtrends

Afzal Lokhandwala: Sharp market bounces are traps within downtrends
Market bounces in downtrends are traps

Afzal Lokhandwala observed that on March 25, the Nifty500 index was up 2 percent, which appeared to offer fresh hopes to investors.

However, Lokhandwala noted that the market subsequently fell for the next two days, reinforcing his view that sharp bounces during strong downtrends are not true reversals but rather traps. He emphasized that such moves are designed to mislead investors anticipating a sustained recovery.

Lokhandwala previously described the Nifty 500’s 3 percent plunge as part of a prolonged losing streak in Indian equities, according to a recent report. He has also discussed the emotional strain traders face when tracking oil prices to anticipate Nifty movements, calling this approach anxiety-driven in a separate article. These past observations reflect Lokhandwala’s continuing caution over interpreting short-term market gains.

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