Wednesday, January 4, 2012

Nifty path ahead 2012:

Nifty Weekly: Path Behind 2011
Nifty Path Ahead: 2012
2011 Snapshot:
Nifty weekly chart shows what we left behind in 2011. The entire move down is well channeled in 2011 and complex. The year was one of the most difficult year maybe in a decade because of overlapping complex pattern formation. There was no clear trend in either direction. 2003 – 2008 had a good up-trending phase. 2008 had good downward phase where Indian markets moved down steeply. 2009 – 2010 again showed up-trending moves with election gap (circuit up) during mid of 2009.

2011 however did not produce big trending moves but intermittent minor trends. First chart shows 20 Blue bars (Weekly closing up) and 31 Red bars (weekly closing down). This statistics is itself sufficient to convey how Nifty index has moved. But please understand the stocks and sectors behaved very differently during the same period. Sectors like Banking, Real Estate, Capital Goods, Metals performed very poorly whereas sectors like IT, Healthcare, FMCG outperformed. The market as a whole was completely divided.

The second chart clearly shows what we are expecting in 2012. 69 days Time cycles that we have been showing since past 6 to 9 months is bottoming out around 16th Jan (+ 8 days). The prevailing sentiment is extremely bearish, which is contrarian indicator for us. A break of previous low at 4531 will turn even the remaining few bulls into bears and that is exactly where Nifty should bottom out for medium term.

Wave pattern forming is an ending diagonal (Wedge) and it satisfies the most important requirement of loosing momentum as can be seen from both weekly and daily chart where RSI is constantly forming higher bottoms. We are currently in wave e of this pattern or wave d is still ongoing. Either ways it will be sideways to lower drifting market with no strong direction over next week. An end of terminal pattern result in euphoric rise that retraces the complete previous down pattern in less than half the time and sometimes in just a fourth of the time. A move up as shown on chart will be surprise to many but not to our readers.

A new uptrend euphoria will then be created by Nifty breaking above crucial resistance levels as shown and a new bull market has started in 2012 will be the talk of the town. Nifty can move high to as much as 5600 – 5800 levels. However we would be looking out for shorting opportunity then during mid to end of March (as per 32 weeks cycle founded by Vivek Patil) that fits exactly in sync with our 69 days Nifty / Sensex cycles.

Also each of the leg of ending diagonal till wave c has taken approximately 9 days and so wave d and e combined should take around 18 days to complete this pattern. We have already completed 8 days and has 10 to 11 more working days to complete. This again gives us a date of 16th January 2012 which is exactly in sync with our 69 days cycle bottoming on 17th January 2012.

USDINR is also forming an Ending diagonal pattern on upside – a wedge like structure. Bank Nifty index is showing similar formation and losing momentum on downside. This conforms to our pattern analysis on Nifty.

On completion of top around 5700 we can start a steep fall that will be a good trending move again but on the downside.

In short, 2012 shall be a good trending year opposite of what 2011 was and hopefully a year less complex and with better tradable opportunities!

Adieu 2011 and Welcome 2012…


  1. Hey Ashish - good work! quite agree with your analysis broadly. Very few contrarians now. Have a great year!

  2. Thanks sir for updating latest chart

    its really helpful for study

    thanks and Happy new year