23 August 2013: Nifty Elliott wave analysis: We have optimistic Friday but it is on Litmus test right now. It needs follow up buying to sustain. Support is at 5350 levels.

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

For 23 August 2013: -

On 22 August 2013, FII Sold INR 1277.64 crs and DII Bought INR 389.66 crs

Above figures are showing that so far people were just in rush to cover their shorts. 5250 was saved by 4 odd points. We saw tremendous volatility in recent few days and biasing was clearly in favour of bears. Nifty took a technical come back at the time when it was looking too hopeless but it was definitely expected.

I still cannot rule out for volatility. Question is – is it really so bad in market that I should expect 4500 NIFTY? I have few answers for you.

1. In dollar term, Nifty is already at 4500. It is giving me sense that dip will be bought by sensible bulls.
2. INDIAVIX already hit euphoric high near 30. As long as it is below 30, you can expect sidewise moves. It is equally true to note that cross above 30 will give shoot up towards 36-40 levels.
3. Have a look on metal stocks. Tata Steel gained over 40% from its recent lows. History suggests that if recovery comes with metal stocks then it always try to sustain.
4. Stock market always runs ahead of fundamental. If we are at worse or near to worse then it might be time to buy stocks to take some impulsive gains.
5. I cannot say that policy makers will improve by overnight. In fact I am also hopeless as many others. This is my fear but this reality too. I am not expecting any great government actions till election. To be honest, I feel that fundamental situation may deteriorate further till election. This may put Indian market on side wise mode.

Indian rupee should not be cause of concern from the levels of 65. My concern is 10 year bond yield which should not rise. Take a note that Stock market has not reacted with weaker rupee; it was a cascading effect of some actions. Stock market slipped in reality with parallel to rising 10 year bond yield.

Government of India still has time to learn its lessons. Adverse or absence of policy making will put us in dip trouble. I can buy and sell stocks depending on time. First alarm came for this situation in the year 2010 itself. I have already forecasted for rising NPA of bank, GDP @ 5% and weaker rupee in the year 2010 itself.

Now, let us see today’s outlook. Today is going to be most challenging day. I always say that to sustain a recovery most important component is “follow up” buying. It has support in the range of 5350 levels. Litmus test will emerge at 5500 levels only. Technical charts are optimistic but cautious for today.

Visit again to read my intraday updates as I can update about those only during market hours.

Strategy for Nifty July future – SGX AUGUST NIFTY is trading flat right now in opening hours of Asian market. I am expecting a flat to positive opening for the day. Then, technical support will be at 5360-5340 levels. On higher side it may try to give a rise towards 5500 sooner. I can still add that volatility will be the part of life for few more days. Such volatility might be opportunity to make money or lose money. Pick right direction.

S&P 500 – How technical charts works? US market future kept on running in red throughout the day but just before opening it turns positive and saved 1640 levels. Now, it is forming a ranging pattern between 1660 to 1640. Break of any side will give favourable direction. I consider for the possibility of rise towards 1670-1675 levels. No matter if QE is there or taper.       

Regards,

Praveen Kumar