Tuesday, April 16, 2013

Nifty started the upside correction of the fall from 6110 to 5470!!!

Following was published in today's morning report of "The Financial Waves" by Waves Strategy Advisors. This research is published everyday morning before market opens. For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Bottom Line: Nifty continued to protect the recent lows and started consolidating as expected.

Nifty daily chart:

Nifty 60 mins chart:    
Wave Analysis:

We mentioned in previous update, “An interesting thing to observe on Friday is that Banking index managed to show strength throughout the day and also closed almost 1% up. …So the broader market is currently showing some resilience. In short, as long as 5475 is protected on downside and 5600 on upside we can expect short term sideways action between this range. A move below 5475 will take prices towards 5450 and a move above 5600 will start the upside correction!”

Nifty had a minor Gap down opening but filled the Gap during the first hour of trading and showed good strength throughout the day. Prices made a low of 5500 and a high of 5593 which was very well within the range of 5475 and 5600 as we expected. Despite poor performance by IT stocks like Infosys, TCS index has been managing to protect the previous week’s low very well. This further adds to the positivity.

If market protects prior lows after an event and continues sideways action this shows the prior trend is about to reverse. A similar behavior was observed when 2008 lows was formed which was very well protected after the Satyam scandal was disclosed and the trend changed to upside in 2009. However, that was of very big primary degree compared to the current minor degree.

Banking index continued to outperform currently and overall breadth was minor positive. However, prices have been failing to close above 5600 which indicates that our triangle assumption is correct as shown on 60 mins chart.

In short, expect sideways action for a day or 2 as long as 5600 on upside and 5500 on downside is protected. A move above 5600 will open positive possibilities towards 5750 or higher which will be an upside correction of the entire down move from 6100 to 5470.

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