Are we Looking at 3 of 3 in Nifty ??

The market has shown remarkable resilience as it consolidates pre-budget, showing strong support at 7500 levels. The level has been tested time and again in the last three weeks with strong buying support.

The market has been moving in a falling channel  in a 200 point range. Nifty has successfully negated the H&S pattern it formed earlier, so far as, it refused to fall below 7450, thus showing strong bullish sentiment. Though, we have not seen a pre-budget rally, since the market had already vaulted earlier, the budget may have a surprise in store.

The wave count is indicating, we may be in a 3 of 3 count in the Elliott  wave with a possibility of rapid move post budget. The following TTO charts shows a possibility of a highly volatile move post budget. The  weekly chart of Nifty below shows the trend oscillators are placed in a bullish alignment pattern and a strong up move is likely, once the sideways consolidation is over.

There is lot of money yet waiting on the sidelines, ready to be deployed in the Indian market, once there is clarity about the economic policies of the new government.

Is the Worst Over for Tech Stocks ??

The technology pack have significantly under performed the market in the last few months. Tech stocks did not participate in the recent rally as almost all tech stocks led by INFY witnessed deep correction from their highs. INR is again showing signs of weakness after touching 58 levels, infusing life in the tech stocks.

The recent spurt in these stocks is showing signs of trend reversal, as economic recovery in US gathers momentum. The US Fed decision to continue with the tapering strengthens  the belief of a rebound. The Fed plan to reduced the  monthly purchases of mortgage and Treasury bonds by another $10 billion next month to $35 billion. There are good reasons to expect faster growth of US economy in 2015 and 2016, which augers well for tech companies in India.

The following TTO charts of INFY, Wipro and TCS show a trend transition taking place as the medium term trend oscillator crosses over the long term trend and a short term weakness providing  good opportunity to enter these stocks.With a healthy consolidation  and correction, these stocks are all set to be major contributors to the Nifty in future.

The following monthly chart of NSEIT confirms bullish alignment pattern in a long term bull market in IT and the recent weakness  was a short term correction and an opportunity to get in. With the correction in the IT index seemingly over, the NSEIT now has a target of  11200.

  

The following monthly chart of USDINR shows Rupee is likely to weaken in the next few quarters to 66-68 levels unless there is intervention by the RBI to maintain Rupee at current levels.  A 10-12% depreciation in INR will boost the earnings of tech companies significantly. 

Nifty Breaks H&S

As early as 11th June, we had predicted a sideways move in Nifty till budget with limited upside.

Nifty continued to drift sideways as predicted, since the last 12 days in a consolidation pattern and broke through the support at 7480 to go below 7450 on intraday basis. However, with a quick  rebound it managed to close above 7480 giving a hope  that level will be protected on closing basis.

Nifty  has earlier broken through the H&S formation on hourly chart  at 7550 which gives it a downside target of  7300 in the next few days till expiry, unless the pattern is negated  by a close above 7550.

In an alternative scenario, Nifty may continue to drift in a sideways channel and rebound to touch 7600 once again (the blue channel). In this case, there is a possibility of Nifty touching the extended H&S neckline at 7600 and fall thereafter to touch the H&S target of 7300.

Tech : The Only Saving Grace !!

Nifty heavyweights have been in a downtrend of late with the exception of technology as Iraq, inflation and poor monsoon take its toll on the market.

Tech stocks, which under performed  for a while now, due to Rupee appreciation, are now supporting the Nifty and keep it above 7500. If not for the buoyancy in tech stocks, we may have been looking at a Nifty level of 7200.

The following chart showing Relative Performance  indicates how the tide has turned in favor of tech stocks since June 10th.

India's Bull Market: Elliott Wave International

Elliott Wave International in its latest Asia-Pacific update indicates, the cyclical bull market that has started is likely to continue irrespective of the political developments.

A similar view was expressed in our earlier update Modi Wave or A New Bull Market , where  the chart pattern showed a breakout  after a six year consolidation.

Here is the  the link to EWI update :
India's Bull Market: Who Foresaw It in 2008 -- and What It Means "for Years to Come" Read more: http://www.elliottwave.com/freeupdates/archives/2014/06/18/Indias-equity-bull-market.aspx#ixzz353ty6Y5T 

Volatile Nifty !!

Nifty turned  volatile as predicted in our earlier post Nifty Sideways till Budget as Nifty consolidates in the range of 7500-7700 offering good trading opportunities to the traders.

The short term trend oscillators are indicating trend transition, which means the latest fall may be bought into thus preventing any major fall. Any up move, however is likely to be sold into like today.

The weekly chart of Nifty shows further consolidation taking place in the lower end of the trading range and Nifty may touch 7480 in as it completes the down leg.

The budget is still 15 days away and we may be looking at an extended phase of consolidation.

Developments in Iraq needs to be monitored closely as any adverse news may spike the oil prices further and reverse the medium term trend.

100+ Point Nifty fall Captured

The short term weakness in Nifty with trend transition in the short term was  captured in the following hourly chart as Nifty fell from a high of 7666.

7660 was an ideal level to create an intraday short position as the short term trend oscillators slipped  below the longer term as the Nifty consolidates in the range of 7500-7700.

Nifty Sideways till Budget

Nifty made big strides in the last one month. The move started in the run up to the election results took Nifty to 7700  from 6700.

However, the indices seems to be tiring out at 6650-6700 levels. In the following weekly chart, the hourly momentum is weakening  as can be seen from the weekly chart  below. This indicates that a sideways move is in the offing or Nifty could attempt a new high  but may not be sustained.

Nifty is likely to move sideways and consolidate for the next 2-3 weeks in the run up to the budget and not much upside is expected hereon.  As FIIs book profits and wait for policy announcements in the budget, an overhang of poor monsoon may make Nifty volatile at these levels.

Triple Trend Oscillator @ MTA - Technically Speaking June 2014

We are delighted !!!

Triple Trend Oscillator, our path breaking indicator, which is the result of our extensive research over the years on Integrated Trend Analysis has been covered in the June 2014 issue of Technically Speaking, the monthly journal of Market Technicians Association, New York.

Here is the link : http://docs.mta.org/technically-speaking/14-june/

Sensex & Nifty Road Map

The index target estimates are based on the following assumptions :

1. The GDP and corporate earnings  follow a linear growth.

2. Geo-political  stability.

3. Earnings growth accompanied by P/E  expansion.

4. The eight year market cycle of 1992-2000-2008-2016 and the economic cycle  work in sync.  

The World's Cheapest Stock Markets

http://www.telegraph.co.uk/finance/personalfinance/investing/10881855/Revealed-The-worlds-cheapest-stock-markets.html

Nifty Stars Shining

ONGC and Reliance, the two stocks identified by us earlier, sparkled today  to propel  Nifty above 7500 levels.

We had in our  earlier post   Future Stars of Nifty  dated 29th May, predicted the move by the two index heavyweights, which would take Nifty to higher levels.

ONGC  moved  from  Rs. 381   to Rs. 457 ( up Rs. 76 or 19.95%)  and   Reliance from Rs. 1076  to  Rs. 1130 (up Rs. 54 or 5%) between 29th May and today as TTO rightly anticipated  their bullish moves well in advance. Nifty has moved from 7246 to 7525 (up 279 points or 3.85%) in the 5 trading sessions.

The following hourly charts of ONGC and Reliance show the bullish strength of the two stocks.

Nifty has broken out of the consolidation range of 7200-7500 and if it manages to sustain and close above 7500, now has a target of 7760-7800 in the near term.

Reliance Capital : Up and Away

Reliance Capital has turned out to be a flyer, one of the best performing stock for the month of May.

The stock has almost doubled in a month from a low of  Rs. 340 to Rs. 649 today and still has potential to surprise more.

The following daily chart shows the rise is accompanied by bullish alignment of  trend oscillators.