18 December 2012: Nifty Elliott wave analysis: Nifty is still saving 5838. It does not matter what will be the outcome of RBI monetary policy, charts are suggesting for post hour fall. Still a question – will it break 5838?

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

Today’s outlook: -

Nifty has saved 5838 again and it kept on trading in an extremely narrow trading band. I can sense that it was hope of rate cut which was saving this market. There are some signs of tiredness. Now, market seems to be moving only after RBI’s monetary policy review.

Fair expectation is – 25 basic point CRR cut. Repo rate – remains unchanged.

Wave charts are suggesting that this is a phase of consolidation. We can see this market consolidating for few more days. I need to add that as long a 5838 saves we cannot say for anything good on profit taking. There is some crucial development on technical indicators. MACD has given a sell signal, which I kept on discussing from past few trading sessions.

This is a critical phase after a sharp rally from 5548 marks. One by one, many indicators has given sell signal but those put only a pause in the market. Unless we drift below 5838-5815 zones we cannot say that profit taking is acceptable.

Alter views suggest that if it kept on saving 5838 (which not a likely situation) then we can see another wave extension. In my view, globe may enjoy Santa rally but Indian market might be laggard if market takes RBI policy as disappointment. (Note that I am saying about the way market takes, market must be focusing on wording too. Sometime even no rate cut were able to bring cheer and sometime even rate cut can disappoint. This is not a time for guess work).

I like to draw your attention towards one more factor. Government is supposed to present land bill and pension bill in the parliament today. We need to see the hue and cry over ‘reservation bill’. SP has decided to take its action in Lok sabha. I need to say that UPA is taking the benefit of tussle between two regional parties. With every single bill, this government is loosing one partner. I am not raising any question marks on government stability but this is not a good trend and political uncertainty next year.

Conclusion Nifty: It is saving 5838 yet. I am still saying that near to 5850, it is better to wait for the break of 5838 for better confirmation. Technical resistance will at 5888 < 5912. Suppose if it breaks 5838 then only it can open scope of 5770 which I have indicated few days back. Nifty December future has also saved 5880 with a margin of one point. It has happened as premium was reducing yesterday. Charts are still suggesting for likely fall in index if and only if levels break. If not, then another dull day.

S&P 500 – It seems that S&P 500 may give a Santa Rally on year end with hope of some positive solution coming about fiscal cliff. From a point of 1432, it will have stiff technical resistance at 1445. In my view, US policy maker are making unnecessary delay in solving a problem. We will get more clear picture tonight.

Regards,

Praveen Kumar