20 June 2013: Nifty Elliott wave analysis: Asia under sell off after Ben hint that end of easing is near in USA. Technical support is at 5750 now. A huge gap down ahead which will follow by recovery too.

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

For 20 June 2013: -

On 19 June 2013, FII sold INR 544.96 crs and DII bought INR 415.82 crs.

FIIs has sold INR 4257 crs so far in the month of June in cash market. This is definitely concerning now. They sold for eight days in a row. So it is looking like medium to long term under performance by Indian market has tested patience of FII and few have decided for exit.

So, finally conclusive words came from fed chairman Mr. Ben Barnanke that we QE may end in the mid of 2014. Market was expecting this to end in the mid of 2015. It has given 1.35% dip in US market and invited for some more extension of fall in the world. In a true sense, now US economy and stock price will see the litmus test. Are they ready to buy stocks without QE? If “yes” then nothing much to worry, if “no” then everyone should be worried a lot now.

My take on post fed speech is that it has not given the expected brutal sell of yet. It is opening the space for recovery. Indian market should open down somewhere near to 1%.

Let us talk about real concern for Indian market. I am very much worried about the weakness of Indian rupee. Every 10% depreciation of Indian rupee cost 0.80% on WPI and 0.60% (of GDP) on CAD. How can we justify the silence by policy makers? If they were waiting for US fed decision (as hinted by finance minister) that has also came. Leaving currency to stabilize by its own is extremely hazardous decision.  

Technical charts are still suggesting for support at 5770-5750 levels. We are going to see start at that point. If Indian rupee moves below 59 then situation will be extremely concerning. Ignore all technical levels and keep an eye on Indian rupee. Free float mode can take it to 59.00-59.30 levels.

It is likely to open below 59 levels and then it must try to save 59.30 levels. Will RBI come forward to save?    

Strategy for Nifty June future – SGX NIFTY is trading with a loss of 60 points and hinting opening near 5760. On the adverse outcome by fed, it was expected. Recent recovery wave is from 5692 to 5867 and 61.80% fall came at 5758 levels. We will open near those levels. Technical charts are not hinting for more weakness as long as 5750 hold. I will look for currency market. Break below 5750 will give a test of 5725-5710 too.

Asian market is weak but not in panic.

S&P 500 – I am keeping this line as it is. “I repeat that that 80% chances are that S&P 500 has made a top for the year 2013”.

It has not traded above 1653 and given edge to bears. Now 50 days moving average is at 1616 levels which are still 12 points away. The way it has broken, it seems that we should prepare to see 1600-1598 levels. Remember, it has failed at stiff resistance @ 1653 levels. 20 EMA is at 1633 levels. A red close today will be a confirmation of upcoming strong dip. What I am saying is that preferred to see more red if we get follow up selling. I do not want to speculate on follow up trades. So far, it is profit taking, not the panic yet.

Regards,

Praveen Kumar