29 August 2013: Nifty Elliott wave analysis: Expect short covering on derivative expiry day. Nifty can reach as high as 5400 too. Welcoming RBI step as they corrected their “BIG MISTAKE”. Please do not commit this again.

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

For 29 August 2013: -

On 28 August 2013, FII Sold INR 1120.43 crs and DII Bought INR 506.78 crs

First big news for this morning in my view is this – “RBI opens special window for forex purchase by oil companies.” The PSU oil companies are the biggest buyers of dollars, requiring USD 8-8.5 billion every month for the import of an average 7.5 million tonnes of crude oil. The RBI decision is aimed at curbing volatility in the forex market.

Take the impact – Rupee will open this morning with great strength, may be near 67 levels. This was much needed step and I quoted about this step earlier also as solution. Next question is who has thrown oil companies to open market for buying dollar? Well, it was our present RBI governor. This is what I called as ‘policy error’. Readers should conclude themselves. I can say that Indian rupee will at least not going to be volatile for intraday from today. I still need to see if RBI is too late for this step.

My condition and concern is 10 year Bond yield. Thankfully it saved 9 and gave me reasons on technical charts too to buy equity.

As quoted in the chart, you can see that length of wave ‘c’ elongated towards 5118 which was turning equal to wave ‘a’. Wave theory suggests that whenever this condition occurs then ‘a bounce’ deserve. One must focus on RSI too. We added long when NIFTY was at 5150. It was the moment when 99% traders were extremely pessimistic. It was the time when IndiaVIX was shooting 36. (I have a suggestion for NSE, please open VIX for trading).

We have derivative expiry today and I am expecting short covering. My expiry target is near 5400. Let us see. Nothing cost me from expecting as my buys are from extremely lower levels. Remember, I am bullish on metal stocks and pharma stocks only.

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

Strategy for Nifty August future – SGX Nifty is trading with a gain of 25 points right now. It is giving me a hint for higher start, may be above 5300. Technical charts are giving me a hint for support at 5260 to 5240 levels. Stabilizing rupee will force bears to cover short. If short covering comes on expiry day then I can expect 5400 too. Are you expecting 4800-4600-4500??? (all in a month?)

S&P 500 – So far, 1627 and a bounce. This is what I gave as a road map. Now fluctuating in the range of 1625 to 1640 will not give trades. I can short this only if it breaks 1618 in decisive way, leaving odd 8 points on table. On higher side also, I need to a cross above 1642 to think about long. So, I have no trade on US now. Let us wait and watch.

Regards,

Praveen Kumar