Oct 20, 2013

NIFTY 50! CAN IT DO IT THIS TIME? NIFTY CAN RISE TO 6414 THEN 7300 AND THEN CROSS 10000. Read interesting analysis on market movement over recent past

NIFTY 50! CAN IT DO IT THIS TIME? NIFTY CAN RISE TO 6414 THEN 7300 AND THEN CROSS 10000. Read interesting analysis on market movement over recent past

Nifty made a lifetime high on 31 January 2008.  Three years after it attempted to cross that and make new high on 30 November 2010, however it failed and then slumped to make a low of 4531.15 over the year 2011 on 30 December 2011.
After that, it again rise to the 6000 levels over the next year of 2012 and made high of 6111.80 on 31 January 2013.
The year 2013 was not full of surprises though in terms of market movement and news flow from domestic and international level. We are running into 10th month of the year 2013 now.
If you read our previous articles on market movements the markets had to make a high near old highs late to late by July this year and then cross it. But the so called bowl or multiple head and shoulder pattern is always haphazard. The market has lost its opportunity to rely on that pattern.
The market in monthly chart has formed a cup and handle pattern while on the quarterly chart also it is forming favorable set up.
Nifty has closed at 6200 which is merely 200 points short of the lifetime high. It is noticeable that market has risen steadily this time after a downside and rejected all the hypotheses that this is a pullback rally which should be sold into. However we should not forget that it was only in this august, merely 2 months back that market slipped to 5100 levels, which was its third consequent month of decline from 6200 plus levels again made just before 2 months in May 2013!
Our hypothesis in brief is clear, most inverse and simple multiple head and shoulder patterns which are spanned over the long term doesn’t result into exact breakout which happened in Nifty also (you can take another example of Piramal Enterprise Ltd stock among many other similar stock set ups). While a cup and handle like pattern is mostly responsible with struggle to give belated breakout in such set ups. Similar set up appears on Nifty as per our findings.
One interesting thing is also that Nifty has been trying to break its 2008 high (as now almost shameful how it has been unable to do so even after 5 years-while the so called doomed Europe and USA touches those levels and above) since the beginning of this year in January 2013. It has done so on about 3-4 times. And this is its 5th attempt running which is looking very promising as per the analysis.

According to Dow concepts, market was in range contraction mode from December 2012 to May 2013 and entered range expansion mode from June 2013 till date in October 2013. If market is to continue this run up with high boost then it has to cross 6414 level. Then next target will be 7300 in 12 months only without doubt which will guarantee a level of 10000 plus in Nifty over the span of this coming new bull market. But as said 6414 closing on weekly basis is necessary. Even if market falters after such condition is fulfilled. It shall regain its strength and follow its due course upward.
In case market doesn’t do likewise, it is likely that it will again slip in its last 5 years habit of range trading. It will try to go down to 5000 again. However, we do not see any doomsday scenario for Indian markets. So, ‘business as usual’ will again become the mantra for Indian markets if it slips again and feed in the declining prices of hundreds of stocks which are not at all giving sign of any bottom out, stocks of variety of universe across caps and sectors. This is a very depressing aspect. But we are right now looking at the picture the indices are showing and hell we know how strong the power of indices are to change the moves of stock prices.
If the market runs as per our forecast, we will remain with the leaders in the first phase of the run up that is till it has settled around 6500 levels. We also expect a faltering in trend to give room to profit booking rally which will be followed by strong up move days, so only buy on dip strategy should be adopted on such occasions.
To add fundamental note we will remain limited in saying that Indian economy continue to remain weak with no (repeat no) signs of improvement or bottoming out of GDP, IIP growth, or CAD (current account deficit) or domestic money supply and liquidity situation emanating from any clarity on interest rate scenario. Market will be driven due to further decline and then strengthening of rupee against dollar which will be result in eventual only decline over the at least next 12 months. Always remember market doesn’t go up because rupee strengthened against dollar or go down because rupee weaken. This is nothing but mere oversimplification. While NSE and BSE will continue to do good job at manipulating the indices and continue to remove stocks which are weak or become weak if any over the next few months. FII will pump more money to take immediate benefit of declined rupee…at every decline. The god of all market is US markets. Indian markets are being supported by the rise in equity market of USA and major fundamental or macroeconomic reason for any present or near future rise remain that. But how the relation and correlation pan out over the next 12 month will remain to be seen. More commentary for members.
So what to do if Nifty is not able to achieve the feat. We believe that market at Indices level do not have tendency to consolidate for many months and never for years (however some are exception such as shanghai composite index). So, that said, market will go down if they are not going up and the abovementioned range trading behavior will likely continue for as long as it can. In such a condition it will even make the 2014 general elections a non-event!
The point is that one should continue to short the stocks that are in down trend and continue to buy stocks and sectors which are in uptrend. Only telecom is one such sector which is trying to shrug off its bad memories and start new life i.e. most probably has bottomed out and start going up, consistently. Traders at last pray that market movement are followed and accompanied by meaningful volatility in individual stocks, weather up or down, any side.
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1 comment:

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