06 December 2012: Nifty Elliott wave analysis: Government won the voting on FDI in retail. I am still focusing on 5912. It is still not sustaining above 5912 to give fresh wave of rise.

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

Today’s outlook: -

Firstly I need to conclude that it was a shy touch of 5912. I can give a discount of 4-5 points as approximation. It has traded till 5917 and then closed with a small gain. Government of India won the motion brought by opposition over FDI in retail. Now discussion will take place in Rajya Sabh from today. As it is executive decision so government is not bound to follow the out of voting. Before explaining technical let me give you my views on the development of parliament. It is going to be little political to understand economy.

Member of parliaments of SP and BSP opposes FDI in retail while they were discussing the topic in parliament. When it comes to voting they walk out of parliament to save ‘the decision of government’. When someone asked them the reasons they said that let us not talk about the voting. It was our way of protest. Both parties belong to the states when majority of self employment are coming in from retail sector. I need to conclude that they gave their half hearted support to FDI in retail.

This should be termed as ‘politics of comfort’. Is it too much political? Yes, you must feel in that way. I need to say that our nation requires strong and bold steps of reforms and those are not possible with “politics of comfort’. It requires joint and cumulative efforts and this is missing. They way things are progressing I doubt if we can expect too many bold steps ahead.

Let us come back to the technical studies. 5912 is still acting as resistance. Remember that 5912 is 23.60% retrenchment from 6338 against the fall from 6338 to 4531 (I am quoting this resistance well in advance). We need to see some comfortable trade above 5912. This is the reason that in spite of best efforts it was never comfortable above 5912. Candle patterns are suggesting that this pause will drive to a pullback. There cannot be anything to worry about trend as long as we are above 5820-5800 support.

Few days back I wrote that market might fall after voting in parliament irrespective of outcome. Few weeks back I betted on fall in US market in post president election day irrespective of outcome. I am not shorting in aggressive ways but I will not buy @ 5900 without a pullback. Let us see. I do not think that I need to change my conclusion.

Conclusion Nifty: Then we will have technical support in the following way 5850 > 5820 > 5800 > final @ 5770. There will be few important resistances, one is at 5900. Assuming for 62% of wave 1 is giving me resistance at 5905. I am considering that 5900 to 5912 (~5918) will be a zone of resistance. Dip can be the opportunity to buy. Cross over of 5912 will give towards 5950 and then 6000 marks to give extension in fifth wave.

S&P 500 – I have said that support is there at 1405 and break below 1405 will drive towards 1390 but this dip is an opportunity to buy. We have seen fall from 1424 and seen a low at 1398 yesterday. Then a technical rebound came to confirm that yes pullback was an opportunity to buy, it was hitting 1415 too. Broadly we are in the range as said in my weekly study. There is nothing much to change. As long as we are not closing below 1405, we are little safe. We are almost end of week and now I will say that one should avoid touching rise or fall. Do not expect pullback every time. It has seen two pullbacks. Rock hard support is at 1390. Will it break?

Regards,

Praveen Kumar