Today I was looking at charts and saw some interesting facts
Nifty every fall from top of 6338 has been 61.8% fibo levels.
Now 4640 is fiboo level as of now and it touched twice and bounced yesterday it broke that level but still closed at 4651.
Now elliot wave support comes at 4595 and 4500 as strong support where 4595 is yearly 4579 is quterly and 4530 is weekly with 4500 as daily last support zone. 4440 is magical number
Once this support zone are violated on closing basis as per daily weekly qtrly monthly bais then next support comes only at 4300 4100 3800 (3800 from where we jumped )
Yesterday’s panic close without much of volume shows bottom is very near because capitulation (capitulation means panic selling )happens whenever there is lots of pessimism and people think market would not come up if u can buy this capitulation then u can earn 20-30% in few days as markets gets oversold and bounce back too fast .
After this bounceback there should be consolidation and retest of lows with higher top and higher bottom formation
Here 4840 and 4990 will become bounce back resistance.
I think 4500-4440 should hold and here are the reason why?
Inflation in india coming down
IIP data worsen in last six months
Above two made RBI pause Interest rate hikes
RBI said would start cutting rates once inflation for this months comes down
For ur info last DEC inflation base was changed so DEC 2011 so inflation would come around 8%
Government is now pushing policies and reforms on fast tracks even taking adjournment motions to move parliament ahead.
So if all this is +ve news as stock market runs on FORWARD EARNINGS so from hereon there can be upmove as low inflation could push rate cut this could business sentiment which could inturn move IIP data which could show up in GDP figure.
Also globally europe and usa data are coming +VE
Then you will think why global markets are falling
First we talk of global
Europe falling because there is still no clear cut guidelines on eurozone funding and bailouts.
Usa falling but is still up 7% for this year.
Yesterdays fall was due and did it on negative IIP data high inflation and high interest rates and no reforms form government
Also there was rumour yesterday that there was some problem with government and home minister P.chidumburum would resign and after his resignation PM manmohan would resign so OPERATORS some big name coming but would not post names here were selling the weak markets as below 4700 people sold as TV CHannels are continuously flashing below 4700 closing mkts could tumble to 4200 4000 levels but I have observed this u will see a one or two day bottoms and then market starts moving up and people who sold at 4700 levels would only buy above 5200 closing.
But what will happen is that at this levels prices are almost at lows and when markets would cross 5200 the prices would be higher 50 to 60 % high from these levels and people will be afraid to buy so market will still move up till 5400 5600 levels where people will enter and so there will come correction and it goes on.
I am bullish in the sense that data globally are coming strong and we will take U turn from this point as discussed above so risk from here is 150 points on nifty and reward 500 to 750 points minimum but I will play a little longer atleast till dec 2012.
Let’s see if 4500-4440 is taken out (probable reason government news or gloabl sell off) and if we get close atleast above 4970 ….. will update when any of the following is broken……Happy Investing