08 April 2013: Nifty Elliott wave analysis: Now 5548 have broken and scope of easy recovery has died. Technical says for rebound but that may not sustain due to political heat. Prepare to see support at 5502 and 5480.

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

For 08 April 2013: -

On 05 April 2013, FII Sold INR 203.19 crs and DII bought INR 21.47 crs.

It was 4^th day in a row on 05^th April 3013 that FII has sold in cash market. This is giving showing that sentiment in Indian market is turning worse from bad. Market was making some attempt for intraday recovery but those spoiled after 2:25 pm on Friday.

Once it has broken 5548 then we may not see easy recovery. If you look at technical charts then you came to know there were positive divergence on RSI and MACD both but recovery denied. I can say that global cues were not able to help Indian market. One must note that our market has slipped over 9% from its recent peak.

This kind of nervousness is coming from ‘political heat’. I am sure that talks and threat of ‘mid-term poll’ will be there for long time but it may never be a reality sooner. Well, threat is enough to dent the market.

Technical charts are suggesting we will have three important resistances, one at 5534 (i.e. yesterday’s low), then near to 5500 marks. If those also fail then you can hope for 5480 too. I am a technician and I can give so many supports but what you should take? Try to grasp the main trend of the market and calculate the possibility of recovery.

Main trend is still ‘down’. There is a small possibility of technical recovery from a panic kind situation but I do not know how long will it sustain. I am sure for one thing – every recovery will get sold at higher levels. A fresh new wave of selling is coming to bring Nifty towards 5400 or lower.

RBI governor blame villagers for higher inflation. Finally, he also started the same song as of UPA. Is it a sign of ‘rate cut’ in coming month too? Yes, it is.

I am giving a concrete thing – if I assume that wave ‘1’ on weekly chart was from 6112 to 5663 then this wave will end at 4955. Opps shocking!!!

Strategy for Nifty April future – I was expecting a pause near 5562 support but the way it has closed is alarming. Expect a gap down as suggested by SGX NIFTY. It may open near 5540 then critical support will emerge at 5503 levels only. We are on the edge of technical recovery but I do not know if it is coming or not. Let us be honest – a recovery will come and then a wave of sell off may hit this market again. In recovery it will face resistance in the zone of 5590-5600.

S&P 500 – Who can stop the strongest bulls of the world? Yes, USA bulls are strongest. European market slipped by 5% from its recent peak, Nifty and Hang Seng has lost 9% but USA indices are still stronger. I do not think for another newer high for S&P 500 anymore but it will try to sustain for 1-2 days more above 1552. I was close below 1552 which was looking sure but denied by short covering. It may take time but it has given opening for fall.

Regards,

Praveen Kumar