18 October 2012: Nifty Elliott wave analysis: it has entered in the support band of 5638 to 5630 and then a mild bounce. I am repeating again that we must watch a break below 5630 to see further fall. Buying intensity has reduced by FII.

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

Today’s outlook: -

Nifty kept on trading near to 5630. It was still interesting to see that it has not broken 5630 levels. It is going to be challenging today also. I am considering that 5630 will act as a ‘make or break’ levels. It is also true that Indian market is underperforming almost all major global indices. On other hand FII flows has suddenly reduced. Just think that Nifty lost 180 points only when FII reduces their money flow. What if they really start selling?

I must say that this underperformance is not normal as no one knows that exact reason of this kind of performance by Indian indices. Note few fact – Dow Jones is down by 1% from its recent peak and we are down by more than 3%. Indian indices are not rising after those so called reforms step taken by government of India.

Technical charts are not suggesting for threatening fall but things will be changed if it breaks 5630 levels. Charts are suggesting for the target of 5500 on the break below 5630 levels. At best I can say that it will have an intermediate support at 5580 levels.

Technical indicators like RSI and MACD is on concerning shape if not alarming. There is something which is not giving comfort to this market. We have seen silence is US market last night. S&P 500 has closed on its dot target of 1460. This buy signal generated when it was saving 1424 support levels.

As I am saying from past few weeks, S&P 500 will have a great challenge to cross above 1475 levels. Take a note that if it failed to cross above 1475 then it may become the yearly top. I do not know what is happening on fundamental front to stop rally. I never felt that QE 3 kind of things can really support stock market. Sooner or later, Stock market has to accept that we cannot rise too much with stimulus supports. Lastly, companies have too come with its performance and that is most important. Corporate earning is also sluggish till now across the globe.

If things remain same then we can say that it can be the reason for profit taking. One can say that corporate earning is not so concerning in India market. Well, even though we are not getting that comfortable higher guidance which is a requirement when we are near to yearly high.

Am I talking about a big and scary fall? Surely not. I am still feeling that after one dip our market may bounce again. For today, I will again watch out for 5630. I am not going to initiate any fresh short unless it sustain below 5630. I do not think that Nifty can easily cross 5700 levels now. Take a note that we have stiff resistance only at 5730 levels.

Let us see.

Regards,

Praveen Kumar