Nifty continues to move as expected!

Nifty Daily

Nifty 60 mins

As shown on Daily and 60 mins chart, Nifty continues to move in a well defined up channel. Prices are moving in consolidation since 2 days as expected.

On Friday, S&P downgraded France along with Italy, Portugal, Spain & Austria. It is being said that markets were already expecting this and Germany rating is kept unchanged which was very important. It will be now important to observe how world markets react on Monday given series of downgrades. A sideways to small negative action will suggest resilience to news event and internal strength globally. However, we still believe this news event will have temporary impact, if any, and the bigger trend will resume its direction which is up for now atleast in India.

As seen on 60 mins chart, we have either completed wave ii or b at the low of Friday at 4840 or which can complete near 4820 level. After wave ii / b is complete we shall start wave iii or c. The structure of wave up will make it clear if we are indeed in for impulse up or a corrective rally. Either ways, atleast one up leg looks pending and we should head towards 4940 – 4950 levels.

Midcap & Smallcap stocks continue to show very good strength. Stocks like Suzlon, IDBI, JSW Steel and largecaps like Hindalco, Tatatsteel, Tatamotors etc are showing amazing strength and have been moving the way we expected during beginning of January. Hindalco has infact broken above the 1 year downtrend channel which is very strong signal for metal sector as a whole. We had shown Hindalco blue print few weeks back and this is exactly in sync with our expectations which might be a surprise for many other analysts and traders.

For now, crucial support levels lie at 4800 followed by 4765 and as long as these levels remain intact we can head towards 4940 and plausibly higher. Increase in speed of rally is what is important if it is a 3rd wave else we will label this up move as well corrective!