Nifty has been driving investors and analyst crazy in last
months and in November it was drifting around the crucial turning points on the
index. We had advised to go long at 5833
on 29th September or to say October issue. We recommended Hold with
tgts of 6212/6370/6500 but we could only achieve 6212 and then we retraced from
6342 to hit a trailing SL at 6200 as we recommended in last issue. Safe traders
got a 367points on our nifty call. On our blog we had seen some negative signs
and initiated a short call for risk takers but the SL triggered the next day.
Nifty is driving really crazy!!! What is making it so??
Fundamental
earning season has been better than expected on the Indian grounds but markets
have not yet reacted in line with results. Sept IIP was below expectations at
2% and IIP august has been revised to 0.43% from 0.6%. But it was better on YoY
or to say MoM basis. But the rising fear was of October CPI which has rose to
two digits to 10.09%. Food inflation was the main reason for increased
CPI. So currently are economy is in
confused state where one side we are noticing improvement in Industrial side
while Inflation is at the peak. GDP which was announced yesterday after markets
was at 4.8% better than last 4.4% but less than expected. RBI is also confused
about economy and not sure about hiking rate.
Now markets are waiting for two things. Firstly, new banking license
announcement. A new story has built up and was confirmed that TATA group has
backed off from the fray to Banking sector. My eyes now are on Reliance Capital
who is emerging as strong contender for the license. I would recommend going
long on the stock from the view point of 2-3 years. Secondly, people waiting are for the
political results which are still difficult to predict. So gloomy picture of
economy is now more biased towards bull after GDP data last evening and a
strong breakout yesterday on Index. Looking at global markets they are at life
time high. QE tapering is eyed by many analyst and I am also supporting the
same view. As the report says Treasury yields are increasing in US and the
thumb rule says stock index is inversely related to bond yields. Job data are
improving in states. So now what we could expect is that FED would announce
taper soon which would taken as profit booking on equity around the world. Even
the financial end in stated next month could have profit taking effect.
Coming
to Charts on Nifty, we could notice a Double bottom formation which has a
neckline at 6212 on daily charts. On breakout of the pattern we could get
target of around 6480. Indicators on daily charts are expecting a up move. Nifty is well above 50/100/200 EMA. Index has
been taking strong support at 100 EMA which is currently at 5960. On Friday it
crossed above a resistance line making a complete U-Turn with a drift. Weekly
indicators are negative but Elliot wave suggest a move of around 300 points
from here while monthly chart suggest that a top is nearby with max up side
around 6500. Taking all three time frames we are getting a strong smell of
6400-6500. Currently nifty is no trade zone of 6000-6200 for safe traders.
Our strategy: Risk takers go long on Nifty while safe
traders go long above 6212 only, with tgt of 6450. SL comes at 6000 and
trailing SL at 6100 once it crossed 6212. On downside SHORT ONLY BELOW 5950.
Note: All the data and
graph is as of 29 November 2013 closing
Disclaimer: I may have
personal position in index and above mentioned stocks. Views and News mentioned
above may have Errors and omissions. My views are biased more towards technical
analysis. Please read and study the market carefully before investing on my
idea. For any suggestion contact me on my email. Some words mentioned in
article don’t mean their actual meaning. They are correlated for market.
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