Nifty in Sharp Correction !!

With the sharp correction Nifty is racing downward and seems to be in a big hurry to reach its  target of 7700 which we had predicted  in our earlier posts when Nifty was at  8550 levels. However, we were wrong to predict that December would be a lackluster period for the markets.

http://eqtrend.blogspot.com/2014/12/nifty-update-on-daily-weekly-charts.html
http://eqtrend.blogspot.com/2014/11/nifty-touches-crucial-target-zone-8400.html
http://eqtrend.blogspot.com/2014/10/qe-nifty-update-elliott-wave-count.html

All significant supports have been broken as Nifty sliced through them effortlessly without any support coming in from FIIs who have turned out to be big sellers. The profit booking was already on the cards with Nifty running ahead of itself.

Technically,  Nifty should have reversed from 8400 and a rise from 8400 to 8600 was nothing but an opportunity to book profit at higher levels, book short positions and a  trap for those who predicted one way run of Nifty to 8800 -9000 levels.

 In our previous posts   we had clearly indicated the Nifty to be in the last leg of the up move as seen from the from the following TTO chart. In the following hourly chart, the hourly trend oscillator had fallen below the daily oscillator and had the effect of weakening the momentum. The highlighted area in the TTO indicator shows that momentum had started weakening from 8400 levels and all subsequent up moves were an exercise to book profits and creating short positions and traders should  have been careful with their positions. As the indices continue to be in oversold zone, traders should watch out before creating any fresh positions.

Begining of the much awaited Correction ??

Nifty has fallen below 8400 with short term charts showing some divergence with Nifty taking a breather. The indices need to rise above 8400 immediately, else the correction may continue into a full A-B- C correction as discussed in earlier post with target of 7700.

Nifty Update On Daily & Weekly Charts

Nifty has more or less attained most probable targets at 8600, but is still showing some strength as sentiments continue to remain bullish and people still don't forsee a trend reversal. This may result in a time correction if  levels of 8400 are held. If broken, we may see the begining of  A-B-C correction with Nifty touching the lower level of 7700.

The TTO trend oscillators of long, medium and short term continue to be above zero, which rules out any serious correction.

The RBI policy tomorrow will define the market direction from hereon till budget expectations set in. FII activities are likely to be lacklusture during December and we may see a rangebound market during the month.

Nifty Touches Crucial Target Zone 8400 !!

Nifty today crossed the target zone of 8400, only to retreat below the level with the oscillators reaching overbought zone. The rally from 7800 to 8400 may well be the wave 5  as discussed in earlier posts

 Why 8400 could be Critical : Nifty Elliott Wave Count.
QE &Nifty Update : Elliott Wave Count

A fall below 8350 may result in correction setting in and may pull back the indices below 8000. Else, the rally may continue to the next probable wave 5 target of 8650.

BackTest Results Nifty - Oct '14 with TTO.

QE & Nifty Update : Elliott Wave Count

The announcement by Federal Reserve ending the QE has triggered a rally in the stock market. This is quite in contrast, when earlier, mere hint of QE easing,  spelled fear of outflow and sent the market into tailspin.

Though the commodity prices –  oil, base metals and some foods – are in a downtrend,  asset prices and debt levels in many developing countries remain at elevated levels following six years of liquidity inflows.

Any increase in the rates by Fed could be pretty negative for emerging markets. However as of now the emerging markets take comfort from the fact that the Fed is likely to keep the rates low for sometime, which may restrict the outflow. Also the fact remains that though the  QE is going to end from the US,  ECB is looking to start another round of QE and so also Bank of Japan may come up with another QE.

As of now, India is much better placed than any other emerging markets with political stability, onset of economic reforms, lower fiscal deficit and lower commodity prices. With positive outlook and feel good factors, India fund inflow to India is likely to continue.

In spite of all the positives, market may see bouts of volatility from time to time as India cannot remain insulated from the economic downturn of the developed economies.

Nifty is presently trading at lifetime high, with the short term indicators showing considerable strength and the hourly chart having developed bullish alignment pattern.

The following weekly chart of Nifty indicate a possible wave 5 in action with target of 8400-8650, before the start of an A-B-C correction, which may keep the market sideways for sometime.

Nifty Hourly

Nifty Weekly

Infy Target Rs. 4,950 ???

INFY has been in a strong uptrende ever since the low it made in May,  with a spate of positive developments after  Vishal Sikka took over as the CEO of the company. The stock touched a high of Rs.  3,890 and  has corrected to Rs. 3,780.

The following weekly chart shows INFY may be forming a possible inverse H&S pattern on the weekly chart and if manages to cross Rs. 4,000 with substantial volumes, may be heading to a target of Rs. 4,950 over the medium term time horizon of 6-8 months.

The TTO is indicating a short term weakness which may result in the stock consolidating at Rs. 3,700 to Rs. 3,600 levels before a fresh upmove begins.

The target indicated is pre bonus and needs to be adjusted for post bonus price.

What is Ailing Reliance ??

Reliance has been one of the worst performer market heavyweight of the last few months.

The under performance started around June 15, when Nifty was at 7500 from where it touched a high of 8179. Reliance on the other hand has struggled to cross Rs.1000 mark and has declined from a high of  Rs. 1135 to Rs. 970. Even at the present levels, the stock is precariously poised as several chart pattern indicate serious downside if the current level were to break conclusively.  The trend oscillators are bearishly aligned for further downside should the present support levels break.

So what is ailing Reliance ??

The government has slapped an additional penalty of USD 579 mn (Rs. 3500 crores) for producing less gas than target from its KG-D6 block. The total penalty Reliance will have to pay from April 2010 would be USD 2.36 bn (Rs. 14,200 crores).


The Supreme Court has appointed a retired Australian judge Michael Kirby as Chairman of the three-member arbitration panel to resolve the dispute between the Centre and  Reliance Industries Ltd on KG basin.


Any adverse news flow on this front may result in breakdown in Reliance could seriously impact the market as the stock is likely to lead the market down.

Watchout this crossover !!

Every time this crossover has happened past few months, Nifty has moved up significantly.

Is this indicating another big move in Nifty ???

CNXIT makes a new High !!!

CNXIT makes a new high of  11,261   at the time of writing this post today and in the process have crossed our target of 11,200 predicted on June 25, 2014 in our post   Is the Worst over for Tech Stocks ??                 

           

Is the Worst over for Tech Stocks ???

Using Triple Trend Oscillator with Market Profile Charts

As anticipated, Nifty completed its small correction and  reversed to achieve its higher target, which could be around 8400 levels. The correction could be labeled wave (iv) and wave (v) has now started with an long entry placed at 7970, the crossing of weekly POC as per the following Market Profile chart with TTO. The buy signal generated by TTO (  zero crossover of the dotted line) is accompanied by price crossing the POC, thereby giving added confirmation.

An advanced trend reversal technique used in TTO can be  used to confidently enter a long position as TTO  starts indicating the impending trend reversal with trend oscillators crossover as can be seen in the following chart. The crossover 1,2 and 3 have already taken place which has resulted in more than 100 point jump in Nifty. Crossover 4 will result in Nifty touching new highs. Each subsequent crossover confirms the trend  and new positions can be added.

Why 8400 could be Critical : Nifty Elliott Wave Count

The level of 8400 could turn out to be a critical level for Nifty as can be seen from the Nifty chart below.

Alt 1 : Wave 3/3 extension complete and start of wave 4,
Alt 2 : Wave 5 complete and start of A-B-C correction.

If the wave count holds, in either case we are likely to see a major correction post 8400 as the charts indicate now.  The TTO indicating  a possible wave 5 in progress but whether it is major 5 or 5/3 is yet to be confirmed.

Indian Bull Market : In Retrospect

As Nifty surges ahead to strike 8200 ,below is the collection of our posts, as the new Indian bull market unfolded itself and we were able to pretty much stay ahead and forecast the trend ahead  :

 

 

CNXENERGY : Poised for Big Upmove ???

CNXENERGY has formed  an inverse H&S and may be poised for a big up move with a target of  10,400.






With the gas pricing decision round the corner, Reliance, ONGC and Oil India  could be the big beneficiaries. ONGC has conveyed to the government that it needs a price of $6-7 per unit to make its plan for producing gas from new and ageing fields in the next few years viable.

Gas price hike will benefit ONGC, Oil India   more as they produce more than 70 percent of India’s gas requirement.