19 December 2012: Nifty Elliott wave analysis: Nifty has broken 5838 for few seconds and bounce back. It is tougher zone to deal but we may expect the re-test of 5959 to 5965 levels.

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

Today’s outlook: -

RBI kept all key rates unchanged. We have seen slip and then a strong rebound. Market is taking things on really optimistic way. It is concluding that no rate cut in December is a confirmation for big rate cut in January. Every time different set of influential people came to pressurize RBI and Stock market moves in that way. Banking amendment bill and company bill has passed in parliament. Land bill and insurance will has deferred to Budget session.

So far charts do not understand the reason it only gives the direction. It is showing that as we are saving support of 5838 to 5820 then we need to see the bounce. I can say that we may see the speculative rise again.

FII – net buy INR 922.37 crs, DII – net sell INR 491.12 crs.

Technical indicators are fluctuating and we need to give higher priority to the trading pattern. So as long as this market holds above 5888 after a gap up this market will try to inch higher. I need to say that this market is discounting many good news so reactions may not be very big. Do take a note that now companies have to spend 2% on CSR. So far I can say that these steps are good for long term.

We need to watch the development on technical indicators. In two words I can say that this is the phase of ‘Paralysis of Analysis’. Market may not move parallel with technical indicators. The good way to trade is to give higher priority to the fast moving indicators on small time frame. We are still trading near to the monthly opening only. Movement are little higher or lower from 5900 marks but no decisive move is coming yet.

We have sell on MACD and we have negative divergence too.

Conclusion Nifty: It has given a fall after RBI policy but rebounded strongly on January hope. For today, as long as 5880 hold we can expect a move towards 5950 to 5965 levels. Only a cross above 5967 can give us a sense to talk about higher levels like 6000. To be honest, there is no idea how long can this market extend. Surprises may come at higher levels.

S&P 500 – It came at 1445 on the hope of some positive development on fiscal cliff. Problem or no problem, S&P 500 rebounded by 100 points from its low. If it sustain above 1445 (which is likely now, if we close above 1445 for today also) then expect a move towards 1470. I am still giving higher importance to 1475 but analysis needs to be on fair side. Can we hit 1500 on S&P? Looking like nothing is impossible.  

Regards,

Praveen Kumar