Nifty has been witnessed riding in the channel since last 2 months and today we saw low at that support line for 3rd time in same channel. 5750-5794 is the strong support range on the nifty charts as many technical points are clustering around the same level. Still i am not seeing much downside to gain if we short from current levels. So right now risk takers are advised to go long with sl of 5750 and safe traders are advised to take long position over 5883 with short term targets of 5960/6080
Tremendous performance by Nifty last month!! Last Month issue i did mention to go long with targets of 6045/6150 on Nifty and we achieved it with no stoppage. But now nifty is packed up with a box and its delivered with sign “Fragile-handle with Care”. Bank Nifty was surely the outperforming index as intimated in my last month issue. Now its time we may see some profit booking ahead. We might not see some vigorous downside but we may seem some range bound movement of nifty between the range of 5855-6350.
RBI’s rate cut anticipation was the reason for the nifty’s start up run while rate cut on 3rd May bought more fuel to run up nifty chart. Even the inflation and WPI had improved in favour of the economy which got investors into much of confidence. But we are still not full recovered from crisis. Talking about global markets, they all are inching up at the life time high. US had jumped up on better employment numbers but a bloomberg issue mentioned that bureau of labour statistics in US had said that employment at real level hasnt inched up as suggested by numbers. Ofcourse number arent manipulated but they show only the educated class of labour where as the uneducated which accounts for major chunk of employment in US is not considered fully. Employment of lower class profiles has not picked up and many labors are facing problem for their living. So yet we cannot say that US markets have fully recovered from 2008 crisis though their financial market depict it. US companies have announced good set of numbers this quarter which was the strong base for the move along with numbers. Talking about Europe indices, they are urging up but their economies are at the state of double recession. Nothing have improved much in europe but they are driving themselves along with their western counterparts. Nor Industrial production nor employment have improved in Europe. China on other hand have halted imports of base metals as their are experiencing a slowdown. China’s is facing problem of shadow loans (which is unregulated loans) which is accounting for almost 200% of GDP while regulated loans are just mere 30% of GDP. Due to strict formalities even local government have relied upon shadow loans. If the slowdown continues than this could be another bubble like in that of US. Japan had also devalued their currency for the first time which was the only reason for upmove in the financial market index, where as fundamentally their economy has not recovered from Tsunami crisis. So we could conclude that fundamentally still all the economies need strong reason to be considered recovered.
Coming to technical’s on Nifty chart,we have seen some bearish characteristics last week. After a rally upto 6230, we saw a Bearish engulfing pattern on weekly chart as seen on the attached graph. This pattern is considered to be bearish sign on the top and we were on the top when this occured on the chart. But taking into elliot wave, nifty has already retraced 38.2% from the top with respective to last third wave rally. It suggest consolidation phase on the chart. All the indicators are in no-man land suggesting the move either way. Secular trend is ofcourse bullish on monthly chart but daily and weekly are suggesting some profit booking with is in-line with fundamental view. That’s why I meant that nifty is fragile at the moment and could go long way but on either side. Our strategy on nifty would be wait and watch and take position on either side of range 5855-6118. I expect commodity stocks to outperform next month and my picks would be TaTa Steel, JSWSteel, Coal India and Ster.
Yes!! Cricket fever is back on my mind infact for most of fans of cricket. Presently fans are “Divided by teams but united by king-NIFTY”. Nifty in terms of cricket is always fun for me to post. My post title is not just for the sake it does has a meaning. Nifty could outperform in next few months and even do better than any IPL team. Economic data this week has been cheerful for our markets. Retail inflation plunged to 10.36% and WPI at around 5.6% which almost at lowest of 3+yrs. This made hopes of rate cut more stronger amongst all class of traders. On last Saturday i did posted that Banknifty index was a good positional buy on Monday and we saw +400points in 2 days. Still banking stocks seems a good long term buy at current rates. Coming back to economic situation, india was the only underperformer or you may say late to recover compared to its developing peers. We just needed a strong reason to bounce back and i guess we have got one. Technical 5450-5630 was strong range of support which i did mention in my last post on nifty. I am sure risky traders would have been long at 5500+ while safe traders would have got long above 5630 which is bull zone as i mentioned in earlier post. If you havent got long, dont worry, you havent missed the bus. Talking for specific sectors than concentrate on Cement sector (Acc and Ambuja) and banking sector (Icici,Dena,Axisbank) for next rally. But even bharti Airtel is good but at CMP for risky traders. Now the short term target comes down to 5710-5734 and long term target at 6500. 5400 should act as a strong support and that should be the stop loss for positional trade.
Just Imagine yourself on the tip of the Ice-Berg!! When you look down you will feel that ice-berg ends at the water-level but the basics says the height inside the water is more than above water. Nifty traders are exactly standing at the tip of the iceberg. Today we saw nifty closing below 200 EMA for second consecutive day which is weakening the bull run. Political surprise + Cyprus banking freeze has made nifty chart take a u-turn. Three Charts above are of three different markets which are inter-related. Top left is USDINR, Top right is GOVT 10 YR BOND Yield and down center is NIFTY Chart. Bond Yield and USDINR are inversely related to Nifty.. But Nifty may lag in reacting to bond yield. Or you may say that bond chart shows the signal early. Now check out the yellow line on bond chart, it made a top at 7.96% on 4th Feb and it has closed at the same level today which is acting as a resistance. But now we see a rise in yield from monday or next week than that the sign that Nifty may seem downfall. Now taking USDINR chart, it has also the same implications. USDINR has been in the symmetrical triangle formation which could breakout on either side but indicators suggest this time it will break 55.40 which has acted as support thrice but before that 54.95 is a small breakout on the way. Now weakening rupee is another indicator adding to the weakness to Nifty chart.
Coming to our Nifty chart we have seen two things breaking at the same level. First, a trendline as seen on the chart and Secondly, 200 EMA (Not plotted) at 5672. So technically we have got some weakness in the markets. On my Last article 3..2…1..Go!! i mentioned that 5630-5690 is strong support and we did see 300 points rally from that point but than Political instability came as the shock to the country. All the technical and fundamental analyst were made to think other way round and now it seems gates have opened for 5447. In my article i did mentioned that below the support range of 5630-5692 we may see the level of 5447 and now chart has shown signs that IT MAY move towards that level. To support my view, we even have a unfilled gap at 5447 which could be the support to be filled up.
Next week is gonna be important for our markets as Cyprus case would have a final resolution plus financial year ending and top of it holidays in trading session. All the three market moves on next week should be closely watched to predict the future of our market.
Strategy: As i had mentioned in my last article on 25th Feb that 5400-5630 is no trade zone for the long term investors. Yes ofcourse that could be the low but you never know as i said that iceberg could be more dangerous than it seems, so its better we sit quite. 5560 is a small but important hurdle that may act as a key reversal point after 5630 but before 5447. So now add longs only above 5850 or else just hold your position. To hedge you porfolio Buy 5500 PUT Option of MAY expiry at 68. So right now we are in no trade zone. If we see political stability than we may see new high in month of May.
.thts STRICTLY intraday. While positional traders add long above 5954. So there is no short opportunity on chart as of now for positional trade…so my range for tomorrow is 5900-5925