09 October 2012: Nifty Elliott wave analysis: High was 5815 which was just close to my mentioned resistance of 5810. Close below 5750 is concerning. Earning season will be litmus test.

You must read previous articles and watch above chart carefully to understand this article completely.

Today’s outlook: -

We got the desired fall at the break of 5750 support levels. Technical charts are suggesting for short term decisive support at 5638 to 5630 levels. I have already said this earlier too that market need to make some adjustment before earning season. I do not have any reason to believe for good numbers and guidance.

Firstly, we have got constant poor GDP data in past many months so quarterly numbers may not be good. On other hand IMF reduces forecast for India to 4.90%. It is showing that even guidance may not be as good as market is wanting right now. Many global companies are not looking very comfortable when they are releasing future guidance.

Technical indicators are looking more viable now. I studied on RSI and quoted in past few days. I gave important to my third sell signal. We have seen the expected dip. We must note that it was first day of weakness given by RSI and it need to sustain for many more days. It is giving me a sense that whenever market goes higher; it will get selling on those higher levels.

I am concerned about the technical charts of many more index blue chip stocks which are looking on concerning before results, example is Reliance. There are few ways to take today’s market: -

It may open higher by 25-30 points, say @ 5700 levels. Then it may fail at 5725-5730 zone at the max. Cross over of 5750 can able to generate the retest of 5800 levels.

Second way is to look for lower side break. It can go to re test 5638-5630 zone. Close below 5630 will generate the target for 5500 in coming weeks. We must note that Indian market has too many gap up in past one month of trades. On other hand, all Asian market is trading higher. If follow up selling comes in Indian market then fall is unavoidable towards 5638-5630 zone. India might not able to recover as fast as globe.