27 January 2014: Nifty Elliott wave analysis: Nifty to go lower side of “W” pattern which is at 6140. It is wild gap down but do not short this kind of 100-120 points of gap down without pullback.

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

For 27 January 2014: -

On 24 January 2014, FII Sold INR 230.96 crs and DII Sold INR 78.05 crs

Asian stocks declined, with the regional benchmark index heading for its steepest three-day loss in five months, as concern that the global economic recovery is faltering spurred investors to sell riskier assets. US market also got the sell off on Friday night with the same reason.

It was mentioned on Friday that if it failed to fill up the gap down then it has good chances for dip. It closed on horrible note. Now it is ready to take a gap down of 100 points. It can never be easy to trade after this kind of gap down. Next key support will be at 6140-6130 levels. If it breaks then it can hit 6085 levels too.

We have RBI’s monetary policy review tomorrow and derivative expiry this Thursday. It is generating a phase of news based trades for few more days.

What is concerning is banks and what can rescue Indian market is also banks. I am again mentioning that charts are saying for a steep fall on Bank Nifty if it breaks 10800 on closing basis. It is likely to come now.

Strategy for Nifty January future – It is going to give second day of gap down and this time it can be bigger than 100 points. If you do not have shorts then perhaps I suggest you not to touch this market for shorts. It is a general rule to avoid trades after wild gap up or gap down. Technical support will come in the range of 6140 to 6130. You can expect Nifty January month future to run in discount too. Shall I buy low or shall I sell the pullback? Please visit my ‘intraday updates’.

S&P 500 (USA) – It has opened on Friday with gap down near 1815 and broken immediately. Then, selling continues as expected with rapid pace. It was biggest weekly drop of past more than two years. 1768 is going to be likely support if it breaks 1784 right now. This is perhaps first time after a year that bulls at USA are at back foot. I still suggest not to under estimating them. If follow up of selling comes then only we will see fresh fall.  It has already slipped from 1847 to 1790 in three days. Call is – Do not short without any pullback.

Regards,

Praveen Kumar