We were expecting a minor wave up on Nifty but it looks Nifty has taken a V turn in last 2 days without giving prior warning. As mentioned before that break of 6060 will force us to re-evaluate the wave counts. As seen on 120 mins chart, we have shown both the counts on the chart in Red and Blue. Blue is the count we previously marked on the chart and Red is the alternate count. As per the red counting we have completed 3 wave up in form of wave B and a C wave which will take out previous low near 5700 is in progress. This is very bearish count and we would like to give equal weights to both the scenarios at this point and time.
We remain cognizant of the fact that the late weakness in Banking, Real Estate and Capital Goods sector will weigh on Indian markets and further downfall is plausible. We would still like to wait for further confirmation which will be obtained by movement below 5990. The upward rally does not exhibit a clear 5 wave structure but we would still give it benefit of doubt as long as prices stay above 5990.
RSI has also deteriorated considerably and we can see that Nifty has touched 76.4% retracement level to the point and reversed. 76.4% level is very important in Indian Markets and failure of Nifty to cross above this, raises the odds that upward rally is just wave B of a bigger A-B-C correction down.
Key support level to now watch lies at 5990 and on movement below that we will adopt the alternate scenario as preferred.
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