05 February 2014: Nifty Elliott wave analysis: Wonderful recovery same from wonderful support of 5930. Next challenge is “follow up buying”. Expect end of pain only if it can manage to close above 6075.

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

For 05 February 2014: -

On 04 February 2014, FII Sold INR 1234.02 crs and DII Bought INR 864.55 crs

Look at above sell figures by FIIs in cash market. This came when market rebounded 1% strongly from low. I always say that FIIs are known to sell the bottom heavily and known to buy the top heavily. I can say that Nifty got its technical bounce exactly from the important support of 5930.  

Shall we say that things have turned in favour of bulls now? Answer may not be easy yet. At reversal points, one day of rise and fall has no meaning. Meaning comes with follow up of trade. Like, as we recovered yesterday and if we get another good close today then only we can think about end of pain.

Most inspiring part for the bulls is that mid cap and small indices are continuously doing better than Nifty in rise. It is an indication that money is still flowing in the market. Well, but sometime it can misguide too. We are not in euphoric mode and we were never being in recent past so it has lesser chance for misguidance.

What charts are saying now? Consider a recovery from 5933 comparing with fall from 6355. We need to see Nifty closing above 6075 first to say that pain has fully ended. It is not impossible but it is going to be tougher task.

I do not think that Indian market can see any massive dip without any big weakness in Indian rupee. Let us be fair, INR has smartly digested the QE shock. If Nifty starts trading above 6026 then we can hope for 6075 too.

Strategy for Nifty February future – Nifty February future is very likely to see a flat to positive start. So, it was first market in the world to rebound yesterday. Technical charts are suggesting for immediate resistance at 6060-6070 levels. If one has previous long then one can hold but fresh long should be taken only above 6060-6070 levels. Let us give some margin to the bulls to test their own strength.

S&P 500 (USA) – It has got the expected technical recovery. This cannot get any good strength on chart as long as it is below 1768 levels on closing basis. Nothing is impossible at US market but I want a close above 1768 first. I still believe that recovery will continue and S&P can try to come at least near to 1768 and then it will take a decisive mode. Currently, long trade is for technical recovery which can end any moment as long as it is below 1768. In short, I can say that US market will get challenging days.

Regards,

Praveen Kumar