26 December 2014: Nifty Elliott wave analysis: Chart set up is a hint for support to emerge now but heavy premium on Nifty January Future is alarming. A dull trade expected for the last day of the week.

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

For 26 December 2014: -

On 24 December 2014, FII Sold INR 2808.27 crs and DII Bought INR 509.09 crs

Elliott wave theory has already defined the resistance of 8375 as key resistance to make a top for recovery wave ‘b’. Now the dip goes in line with my expectation. In our weekly analysis, it was quoted for a strong start for the week and the weakness. Now, the next key support is at 8120 which is odd 54 points away from current levels.  

It was also predicted on Wednesday for weakness for expiry day. I was not surprised for odd sell off. Have a look, Nifty January future has carried heavy premium. It is almost 100 points. I do not think that it can continue with this kind of premium. It must have happened due short covering in fall too. History suggests that one has to be very cautious of this kind of heavy premium.

For today’s trading session, we can see flat opening. Immediate trading support will emerge at 8120. I mean that this is the only meaningful support which must be watched. I can say that developed indices, especially US indices, may not go weaker. We can see sell off in Emerging Market Indices. I do not have any carry forward on trade. My expectation is for a dull close to end the week.

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Strategy for Nifty January future – As said above, we may see dull trade on last day of the week as market man may go on Holiday mood. Only opportunity I can see is if it gives up some part of its premium. Technical charts are suggesting for support at 8260-8265. It is also true that charts are giving hint for buy to emerge from 8260 levels. Heavy premium is a caution.

S&P 500 (USA) – So far, it is going in line with my expectation. It is on all-time high but dull due to Holiday season. This dull move should continue for few days. I do not think that market participation will go great till New Year. This gives me a hint for dull next week. This does not mean for weakness. US market is strongest of all and it will remain stronger. 2070 and 2060 will emerge as good support as long as participation does not come.