Saturday, February 28, 2015

Budget impact on Indian equity markets!

Budget is about to start and many would be eyeing on the news to determine the trend of the market. 
However, we believe that event can result into short term volatility and random movements rather than driving the trend. The trend whether up or down will eventually resume irrespective of the news outcome. People will then try to fit in the logic to justify the movement of the market based on theBudget outcome! A sharp reaction on Thursday on downside after the Railway Budget resulted into news that the Budget did not show any bold steps and so equity markets reacted lower. But on Friday Nifty was up by more than 150 points thereby erasing the loss of Railway Budget day and entering into the positive side. The news following it will be Economic survey painted rosy picture for future.
Today, if equity markets move lower even after strong Budget following is the news you will read in morning papers: “Budget expectations were already discounted in the rally and expectations were high for bolder steps”. On the other hand a positive close on markets will result into modification of news as “Budget lives upto the expectations with clear roadmap ahead!”. We have no intention to discredit this but please understand the news outcome will change based on market movements rather than markets moving based on the news. So the leading factor here is the equity market!
Now how do we look at the simple methods that help to understand the clear direction and levels for Nifty?
Below is the chart of Nifty showing only channels. Elliott wave counts are removed from here but showed in actual morning research report.
Nifty daily chart:
The below research is picked up from today’s morning “The Financial Waves short term update”that has shown clear path for Nifty ahead of Budget and the crucial levels. Subscribe now to look at this important path.
Budget day is finally here with huge expectations from across the industry and everyone is keeping an eye if Modi government can come out with a Big bang! Anything short of expectations can result into serious capitulation and so one needs to trade cautiously especially after the rise of yesterday. On most of the occasions Budget has acted as a reversal day and closing becomes very crucial. Also we can expect a movement in the range of 2.5% to 4% between highs to lows. This gives a room of around 220 to 350 points movement on Nifty on intraday basis between highs and lows. Also many times the trend is seen about 30 mins to an hour after the Budget is over. Based on this and looking at the pattern on Nifty we have shown the path that prices can probably follow.
Nifty has been moving in period of contraction over past few weeks. With the start of event this contraction can now change to expansion and can follow a path as shown above (shown in todays morning actual report). The sharp reversal on upside has opened up the possibility that the entire pattern is forming as a Flat corrective with wave (c) forming a wedge shaped Ending Diagonal pattern. This is one of the probable scenarios. Also as the event can produce a movement of nearly 220 to 350 points on intraday this can be a possibility.
 In short, trade cautiously on the Budget day amidst the high expectations. Important levels for a clear trend to emerge will be either above 9040 or below 8600. As long as these levels are intact we can expect oscillation between ………. and ……….. levels as per the path shown (in actual report)!
Subscribe now this daily research report and get insights into crucial levels that can provide good trading opportunity today during BUDGET! For subscription option visit the Pricing Page on and select “The Financial Waves short term update” and we will deliver the report immediately.
Attend the two days training session on Mastering Elliott – Neo wave along with Time cyclesshown on more than 100 charts on 14th and 15th March in Mumbai. For more details write to us at or call on +91 22 28831358 / +91 9920422202

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