19 March 2013: Nifty Elliott wave analysis: Nifty has last critical support at 5790. Sooner or later, it will break. Expect a volatile day with influence from RBI policy today.

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

For 19 March 2013: -

On 18 March 2013, FII bought INR 506.00 crs and DII sold INR 459.89 crs.

Our market has moved little lower yesterday on European woes. Now for today, our market would prefer to watch up-coming monetary policy review. Note that market has already discounted 25 bps repo rate cut which is likely to come today.  

Market can cheer only if something comes more than 25 bps repo rate cut. Some people believe that RBI may give CRR cut too but I am not expecting any such moves. One can expect limited trading move till 11 am.

I strongly believe that in the lower side if it breaks 5790 then it will be critical. Wave trend suggest for panic if it breaks 5790. Break below 5790 will open newer kind of concerns in term of trading ranges. On higher ide it will face resistance at 5870 and then at 5900. Final hurdle will remain at 5971. Take a note that RSI is showing for weakness only.

Now, let us talk about euro zone crisis where most market recovered major part of fall by yesterday itself. I am strongly quoting that more bad news will come in 2-3 months’ time. Policy makers are using Cyprus as experiment lab. Worse part is that stock markets across the globe are saluting the wrong tradition. I said this last year also and I am repeating now also that policy makers are playing with the fire. They need to understand that Stock Market is not ‘the economy’; it is just the mirror of economy. I am strongly warning, stop taking non-sense moves which can explode socio-economic equation.

Just think, people at Cyprus are going to pay for whose fault?

Looking on this kind of development I am sensing that equity price may not stable at higher levels in short term. Condition in India is also not looking good as we are slipping lower on global investment priority.

Should I add friction between DMK and Congress? Well, those are just domestic political drama. Do not give any importance.  

Strategy for Nifty March future – It is very easy to say that market will decide its course after RBI policy announcement and you should not trade before that. Charts should say things before event or must be hinting something. I am neglecting the impact of RBI policy.  Market may see slip in post policy hours irrespective of announcement. It may see some good degree of volatility before falling. Is it going to give something wrong? May be yes. Technical support 5805-5800 for March month future.

S&P 500 – It was first break on the chart yesterday. Before you say for recovery from low, first look at CBEO volatility index. It has seen a shoot up of 20%. It is giving you enough hints. I am sensing that a bigger fall is coming. Do not worry about reasons as those will come on its own time. Take a note that now the time has come to see the impact of all those negative divergence.

Regards,

Praveen Kumar