Tuesday, March 10, 2015

Nifty: Reason we have been bearish after reversal from 9119 post RBI action!

Sharp down move in Indian equity markets might be surprise to many but we have been expecting a down leg as soon as the Gap was filled on the same day of announcement. 
Below is the research report we published on 5th March 2015 morning before equity markets opened.
Nifty 60 mins chart: (published on 5th March morning in our research report)
Happened: as of 10th March 2015
Wave Analysis: (published on 5th March morning research)
In previous update we mentioned that In short, Nifty looks to be in matured stage of up move but unless prices break below previous support level of 8885 followed by 8750 trend will be positive. On upside the channel resistance is near 9060. Trade cautiously as we do not rule out the possibility of sharp reversalBANG ON!
Nifty had a Gap up opening touching intraday high near 9119 after repo rate cut of 25 bps yet another surprise move by RBI. The index opened sharply higher and many would have assumed similar price action like before which happened on 15th January 2015 when RBI took similar step. There was one major difference during both the scenarios. The previous action by RBI was when the downtrend was in matured stage and yesterday’s action was when the trend was in matured up move. We also warned that sharp reversal is possible and yesterday’s movement vindicated our cautious stand despite the event.
In short, the trend for Nifty has reversed over short term and the high at 9119 should remain protected atleast for few days if not weeks.One day of action is too soon to conclude medium term reversal and so today’s movement will be important to observe. The AD line has continued to deteriorate which is in sync with our Ending diagonal outlook. Now a faster move below 8885 followed by 8750 will be strongly bearish but if that remains protected then we can expect pullback on upside in form of final wave v which will be mostly truncated and not break the high made yesterday! It is time to sit tight as we are entering into very important zone where medium term top looks to be in close vicinity!
Happened: Nifty continued to move lower and in just 3 days time touched the lows of 8680. The fall has been steep and fast with across the board participation on downside. We have been loud all the while to avoid buying the euphoria. Such down move clearly suggests why it is necessary to have strong objective techniques that help to catch important reversal areas!
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