29 July 2013: Nifty Elliott wave analysis: It is not good to see close below 5980 before RBI policy. Moving average support is in the zone of 5860-5850. To get strength, we need to see Nifty above 5930.

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

For 29 July 2013: -

On 26 July 2013, FII Bought INR 278.04 crs and DII Sold INR 489.17 crs

Market is likely to be very nervous before RBI monetary policy. Nifty lost 0.40% on Friday (still positive for month by 0.80%) but bank Nifty lost 1.40% (negative by 10% for July month). It seems that banking stocks are going under re-rating. This is adjusting with their higher NPA.

Now, all eyes are on upcoming RBI monetary policy which is scheduled to come tomorrow. I can say that expectations are clearly divided. Some expects unchanged policy, some expects rate cut and some expects even rate hike. It is beyond the limit to guess about RBI governor’s mind.

No Asian market is looking better than EU or US indices. Even Japan is also on slipping mode. Technical charts are giving multiple trading supports on down side. 200 DMA is at 5852, 100 DMA is at 5862 and 50 DMA is at 5898 levels. Hence I am expecting good trading support in those ranges where we are already trading.

It is equally important to note that we are not getting some critical negative divergence which is first sign of caution ahead. To achieve any kind of strength, Nifty needs to stand above 5930 at least.  Extreme side of weakness can push it towards 5830-5800 levels too.

Upcoming two days are important for US market too as we have fed meeting on 30 July and 31 July 2013.

Strategy for Nifty July future – SGX AUGUST NIFTY is up by 10 points. It is likely to open flat. As long as it is above 5900, it can try to save. Suppose, if it breaks 5900 levels then we can expect 5870-5850 levels on downside which may be quicker fall. I am expecting range bound trade.

S&P 500 – We saw another example of strength in US market. S&P 500 open lower and hit 1675 before rebounding. Finally it closed in green. Now, 1700 is practically a level to deal. It is very obvious that it might be invited many bears to short near 1688-1675 zone. I feel that crossover of 1700 will force everyone to cover their short. Daily chart has negative divergence on MACD so rise may be limited. So far, keep an eye on 1700 levels.

Regards,

Praveen Kumar