Thursday, July 25, 2013

Bank Nifty and USDINR - Medium to long term outlook using Elliott wave

By Waves Strategy Advisors, For various research products visit or write to
On Bank Nifty, the level of 25,000 & 40,000 might sound irrational or crazy at this point of time. But history shows that things that seem far of reach are still plausible if you apply objective techniques. The below chart itself shows that in 2002 Bank Nifty was trading at 900 levels and by end of 2007 it quoted at 10,000 levels. This is the power a Bull trend. Bank Nifty increased multifold from 900 to 10,000 i.e. more than 10 times in 6 years. In 2002 when index was at 900 if someone would have predicted 10,000 people would have rejected that on the face and would have used the word “Crazy”. But history of world markets let alone India has from time again showed power that Bull trend has.
In 2009 March Bank Nifty was near 3400 level and by November 2010 the index touched 13300levels i.e. a rise of almost 4 times in less than 2 years.
The following is published in “The Financial Waves Monthly Update” that gives multiyear target for Bank Nifty with clear justification of why we think it is plausible.
Bank Nifty has been forming very similar structure to that of Nifty. The rally in Bank Nifty started in 2001 and it was leading the Nifty rally which actually started in 2003. As shown in Figure 4, channels are working very well on multiyear time frame. Prices are now in yearlong consolidation since top was made in 2008.
Figure 4: Bank Nifty Weekly chart
(Actual chart has many more studies like Time Cycles, Projections, Levels, Elliott Wave counts)
We do not expect this rally to start now as there is more time left for the correction. We again re-iterate that the current market is not an investment market but a trader’s market. Our daily equity research report Financial Waves Short term update gives short term moves expected on Indian market but for investment perspective one should wait for the current correction to be over which is mentioned clearly in the monthly update.
USDINR Analysis:
Indian currency market has been amidst lot of news lately. The depreciation seen in INR against major currency pairs has put lot of pressure on RBI to take corrective steps in order to stop INRfrom deprecating further. We have been mentioning about the strong uptrend in USDINR when it was due in May 2013 and the pair rallied from 54.50 to near 61 levels as expected. RBI has been intervening in between as well during the uptrend but that only resulted in short term sideways action and the trend remained intact.
Figure 6: USDINR Daily chart spot
The above chart of USDINR clearly shows why prices are failing to move above 61 levels. It is not necessarily due to RBI intervention but the trend was due to turn. Government actions produce short term spikes or movement but original trend eventually resumes. To know the future ofUSDINR look at either short term Forex report or for long term levels subscribe to the Monthly update.
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