24 January 2013: Nifty Elliott wave analysis: Nifty has rebounded sharply yesterday from 6020 but it may again feel pressure at higher levels. Advance – Decline ratio and mid cap performances are poorer. .

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

Today’s outlook: -

On 23 January 2013, FII bought INR 802.62 crs and DII sold INR 852.33 crs.

We have seen sharp recovery yesterday from lower levels of 6020. It was not very expected levels but reasons were equally odd. It is fashionable to give support to the market by big talk. I have no reason to believe that we will get anything lower on fiscal deficit, no matter who advocated.

From past three days, my idea is that we should have stiff resistance at 6100 and then market should retrace towards 20 EMA. It has slipped from 6100 and as of yesterday’s close 20 EMA is at 5996 levels. I am still feeling that we will see stiff resistance at 6100 marks on any rise.

Before making a top market tends to give some indications in advance. We have relatively lower performance by mid cap and small cap indices. These indices are performing poorer compared to blue chip indices. Another worry point is that advance-decline ratio is constantly poor from past many trading sessions.   

I have already discussed the negative divergence by MACD and RSI on daily charts. This could result some sharp impulse at higher levels. Yesterday’s rebound from lower was also another example. This is still not comforting. We need to remember that RSI and MACD are hinting that rise will be limited above 6000 marks and it is true till now. In spite of tremendous money flow by FII, our market is at least not rising.   

I am repeating that RBI may not go for 50 bps repo rate cut looking on inflationary environment. This can be disappointment for market but market is not discounting this yet.

Strategy for Nifty January future: We can expect a pause on rise at 6082. Cross over of 6082 might result the attempt towards 6111 levels but it may fail again. It is looking like we may see fall from higher levels. In the down side, I am already quoting for support at 20 EMA. This is showing that Nifty future need to come near to 6000 to 6010 marks. We need to remember that as long as we are saving 20 EMA, it may rebound like yesterday.

S&P 500 – Day by day it is inching closer to 1500 marks. After market hours APPLE disappointment is coming. US market is turning dull but not ready to give us. It seems that it can fall only from nearer 1500 marks. This is also coming. I retain my views that anything above 1475 is for short for a bigger fall. I am assuming that reasons will emerge later on.

Regards,

Praveen Kumar