There is a unanimous opinion that Nifty is due for a correction of 8% to 10% in the near term as the market as run up significantly since March 2014 and looks to be running ahead of the fundamentals. Those who missed the rally are sitting on the sidelines waiting with glee for an opportunity to enter the market.
Technically, Nifty has been in a sideways consolidation mode since June with a broader range of 7500 - 7800. A bull market may typically go through time correction rather than a price correction. Though monthly charts show oscillators in an overbought territory, the weekly chart presently is in an oversold zone. The weekly chart being oversold at a Nifty level of 7700 indicates strength of the market. Further the weekly trend continue to show strong uptrend without any divergence or weakness indicating the trend is likely to continue for some more time and Nifty may target a new high before any major correction can take place. A caveat is, of course, any adverse developments which may affect the global financial markets as a whole.
The weekly TTO chart continues to be in a bullish alignment mode indicating market may surge on the slightest hint of any positive development or policy announcements. The weekly ADX continues to be at 45 with DI+ at 32.85 and DI- at 11.65, indicating continuity of uptrend. With the medium term oscillators strongly placed, any significant correction may continue to elude the market and it would be suicidal to short the market just on the basis of a short term weakness.
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