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.