29 January 2014: Nifty Elliott wave analysis: My key support of 6085 sustained and hence we opt to buy low. More recovery to come but Fed meeting and derivative expiry holds the key now.

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

For 29 January 2014: -

On 28 January 2014, FII Sold INR 1267.35 crs and DII Bought INR 1178.81 crs

FIIs are known to sell bottom heavily in cash market and they are doing it from past two days. There is no wonder in this trend. What is wondering me is Dr. Raghuram Rajan. He is now following the footsteps of former RBI governor D. Subba Roa. Irony is that when Dr. Raghuram Rajan was prime minister Advisor he was advocating for rate cut from RBI.  Now when he became RBI governor he is fluctuating with his views.

Another thing is that if there were less reason for hike in December month policies (when rates were not hiked) then we have no reason to think for rate hike (we got hike of 25 bps in repo rate).

He himself is a better man to judge his action. I can say that RBI is still sitting on wrong side. Current RBI governor is lucky enough that he is not facing challenges like the way former governor was facing.

Now, this kind of story continues in Indian capital market. You can never able to judge economy policies based on realities.

Technical charts are still saying that Nifty is weak but it is now over stretched and hence technical bounce is very likely. First good sign is that Nifty hit a low at 6085 on dot yesterday and bounced to close at 6126. We are heading towards derivative expiry and that can make market wilder than expected.

We can expect this recovery sustaining if Nifty manages to stay above 6165 levels. It is tough task but not the impossible task. Let us see today’s trade.

Strategy for Nifty January future – It is going to be a flat opening. There are signs of recovery but those are based on technical pullback only. There are two important levels, one is at 6172 and another at 6211. Firstly, it needs to stand above 6172 to claim for some intraday strength. Secondly, it needs to stay above 6211 to say that recovery can sustain. I hope for recovery and derivative short covering may add fuel.

Shall I buy low or shall I sell the pullback? Please visit my ‘intraday updates’.

S&P 500 (USA) – I had already quoted for this rebound as S&P 500 were near key support of 1769. It has to surpass 1800 marks also. If I keep fed minutes on one side then 1800 marks can come by today itself. it is very likely to gain more from current levels. Futures are also confirming my views for this rebound. I feel that today’s rise or fall will be decisive. One should never under estimate the bulls sitting at USA. Key support right now will be again at 1769 and resistance on higher side will be at 1814+ only.  

Regards,

Praveen Kumar