03 September 2013: Nifty Elliott wave analysis: Expect pause on fifth trading day from recent bottom of 5118. Strong support is at 5500-5480 levels. Up trend will continue unless we get some policy hurt!!!

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

For 03 September 2013: -

On 02 September 2013, FII Bought INR 475.92 crs and DII Sold INR 285.81 crs

In past four trading sessions, we saw rise of more than 430 points from recent low on Nifty. Today is fifth day. We may see a possible pause now. We have seen continued buying in metal stocks. I have already said many times in past that this market may for a short term panic bottom. We saw that on 5118. Within very short time value stocks jumped by more than 10-15 %. Few examples are Reliance, Tata Steel etc.

After market hours, I heard about some great idea to lower fuel consumption. If a government run by an economist throws idea for shutting petrol pump at night then nothing can be wilder than this. Take a note that India is amongst lowest on energy consumption per person. I have forecasted for 4-5% GDP in the year 2010 itself. it came in reality in just 3 years. If policy makers do not improve then situation can turn even worse. Fuel consumption is an indicator of economic activity too. Lower this may give us threat of GDP growth as low as 2%.

Now, let us come back to NIFTY. I was already betting on recovery and I am still retaining my views. I am expecting further extension on rise. Nifty has crossed 5520-5540 threshold range for further trigger. There is a possibility of some tiredness after 430 points of recovery but momentum is still stronger. I was already considering recent few week of fall as buy in dip. I am sure that now even bears will use this market to buy in dip.

We may see rise towards 50 DMA but real challenge to cross the ‘death crossover’. I am expecting a flat start and some choppiness or profit taking may come as today is fifth day. I am expecting that that profit taking will also be bought.

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

Strategy for Nifty September future – SGX Nifty is trading flat. It may try to give a sense of silence. Charts are suggesting for support at 5520-5500 levels. It may try to come near to 5500 also but recovery is very likely even after any dip. I do not think that there is any threat as long as it is staying above 5460 levels. Bounce depends on many sectors and Banking stocks may try to revive.

S&P 500 –  As I said as long as 1624-1618 holds we should wait to take further trades on short side. It has passed three days and not gave any signal. My study still holds that as long as 1624-1618 holds, S&P 500 will try to accumulate of distribute for some time. I can say that it has possibility of breaking lower below 1600 but concrete sell will generate below 1624-1618 only. Can it rebound? Somehow it is giving a feeling that rise will sold out. Prefer shorting if comes above 1660.

I still believe that US will not attack Seria. It does not matter how much threat is being issued by President.     

Regards,

Praveen Kumar