27 July ’12: Nifty Elliott wave Analysis: Mario Dragi’s boost up will not help. Nifty will not cross even 5127. It is a decisive break and expect fall towards 4770 in few weeks.

Today’s outlook –

All stock indices are turning as puppet of central banks. They try to affect Stock marks whenever it turns decisive. A simple message to policy makers,

“Make policies based on economy, not based on stock market. Let the stock market flow in its own tune.” Policy makers across the globe are playing with the fire of stock market. Global indices may have to pay heavy price of this kind of practice. Readers can criticize me for projecting doom days targets but do criticize central banks too. I am asking a question which national media should ask.

Even in India, prime minister has talked about reforms but now waiting is too long. There is no point for him to maintain silence like this. FII has sold INR 1181 crs yesterday and INR 2000 crs in last few days.

In global boost up we may see Nifty at 5100+ levels and Nifty August Future @ 5140. This market will/may fall after that. Look at stocks like INFOSYS, SBIN. Big damage has yet to come in the absence of policy related reform.  

Importance of wave development:

Firstly I like draw your attention towards some mathematics. If I try to draw the a-b-c on charts, it has given me 5078 as strong support. Let us see how: -

Wave ‘a’ begins from 5348.55 and ended at 5169.05. It has magnitude of (5348.55 - 5169.05 = 179.50).

Wave ‘b’ is from 5169.05 to 5257.75. So wave ‘c’ has to begin from 5257.75. If I take 1 to 1 fall then we have a figure, 5257.75 – 179.50 = 5078.25.

25^th July low = 5076.60. I have said this many times in past that wave ‘c’ always has a ratio with wave ‘a’. Those can develop with ratio as 0.382, 0.618, 1.000, 1.618, and 2.618 (Many times known as Golden ratio).

Development of waves = 1.618*179.50+5257.75 = 4967.30

Best technical indicator of NIFTY: (You must note it) – 200 days moving average – Watch the trajectory. After 20 May 2011, it started rising from 5 June 2012only. (It was not rising even in Jan-Feb rise). So the rally continues from 5 June 2012itself.

Wave development: -

I am revising above wave plotting a little looking on current development. I marked end of wave 3 at 5194.60 and hence wave 4 is automatically revised at 5194 (raised from 5041.70). You must be remembering that I have quoted 5090 when it was saving.

Take another calculation, wave 1 = 4770.35 to 4898.95 = 128.60 points (Up)

Wave 5 has to comparable with wave 1 or wave 3.

Consider first with wave 1 – Wave 5 = 2.618* wave 1 = end up 5378. So we can say that 5378 will act as tougher hurdle to cross.

Wave 5 may move in accordance with wave 3. If we see the beginning of wave 3, it was already suggesting for strong up move. Advance and cross over of 5343 will have two important figures, one is 5378 and then 1.618 times from the beginning of wave 2, i.e. 5409.

So you should look for 5343 as first hurdle and 5378 as second hurdle. Wave theory suggests that fifth wave advance can continue till 5343 but I am doubtful about 5378. Although I should not close any views completely so I will keep 5496 in my studies.