NIFTY has clearly made to the top of world’s choicest of financial magazines and business channels due to the returns it has fetched for its investors.
Anyone who would have bought a NIFTY contract in the February of 2014 at the price of around 6200, would have found the recent highs of 8600 a very appealing return on his/her investment (a staggering 38% in a matter of 9 months).
However, with the changing global scenario and inter-country relationships, amidst the OPEC crisis, mingled with tensions from terrorist clans, the undercurrent of a major change on the international front might be pretty evident to many and incomprehensible for only a few. These factors are playing the major role in dragging Nifty to its current monthly lows.
Coming back to the analysis, the sharp correction in NIFTY from the highs of 8650 to 8250 (400 points in a matter of 7 working days) and the poor October IIP data of -4.11% has injured few sentiments , as there is an unwavering determination in the masses that India has entered the era of unstoppable growth and is ready to harvest its untapped potentials.
But is it really true?
There are several ways to find out, one of them is to wait and watch ( and earn nothing), the other is to study into the market movements, using various tools and methods, in an attempt to comprehend the future prospects of the economy and make investment decisions accordingly.
Keeping in mind the overall direction of the Indian Economy and the WPI inflation for November at 0%, have lead us to the expectations of a healthy cut in the REPO rate (a very stimulating act for the economy) in the month of January 2015. This was just a brief round up of the fundamental aspects of the economy. Lets move on to the Technical picture now.
As a disclaimer I would like to make you known of the fact that I am no ‘market guru’ nor a leading sure shot analyst, but I am a determined student of the market, presenting before you my analysis of the Nifty charts based upon the Technical ELLIOT studies of the past market history till date.
For anyone, familiar with the Elliot Discipline the chart here contains the markings of how I have perceived the movements and waves, and what I expect the future course of Nifty to be.
According to my analysis, Nifty has finished its major 5 wave up-move and is set to finish the 3 wave A-B-C correction. As per the Elliot rules, the correction normally ends at the end of second inter-wave of the wave 5 which lies at 8000. Hence I am holding 8000 as the target for this correction. Now this should be interfered by a minor bounce-back to justify the A-B-C format of the corrective wave. The fact to be kept in mind here is that, if NIFTY manages to crack 8000, in this single correction leg, without any consolidation or temporary bounce back , then we can expect NIFTY to scale even lower levels in the next leg of the down move, with a target of 7780-7800 as shown by the weekly chart below. However, in order to ‘activate’ the target of 7800, we need to wait for Nifty to close below 8200 this week.
This was my first ever blog post. I request You to please send me your criticisms via email, or just leave a comment below.
Thanks for reading.