Bottom Line: Nifty reacted sharply lower
even when RBI kept policy rates unchanged. The trend continues to be down!
Nifty daily
chart:
Nifty 60 mins
chart:
Nifty
10 mins chart:
Wave Analysis:
In previous
update we mentioned that “As we have mentioned before the target for
wedge pattern comes near 5810 from where it has started and 5750 is where we
think this wave d of wave (e) in triangle should atleast touch.”
Nifty moved
down exactly as expected. Prices made a low of 5748 and closed near the lower
end of the day. After RBI announced that the rates are kept unchanged there was
minor upside reaction towards 5860 levels and prices turned down from there.
The selloff continued throughout the day with no bounce back. Also the selloff
was not in form of a spike but gradual throughout the day. Midcap and Smallcap
indices continued to bleed and there is some serious carnage in widely followed
stocks that people prefer buying on dips. We again re-iterate that current
market is conducive for traders and hostile for investors. The trend changes
every 1 week and majority of the stocks are moving down.
USDINR showed
sharp depreciation against major currencies simply reflects that RBI
interventions had no meaning. Trying to find out fundamental reasons for such
movement is everyone’s guess. But from technical perspective the move up from
54 to 61 was impulsive in nature and since then USDINR is moving in overlapping
corrective fashion within a range. It is too soon to say if that correction is
over and the trend on upside has resumed but if 62 level is crossed then we can
see some serious currency crisis.
The advanced
decline ratio deteriorated drastically with 681 advancing against 1590
declining. Such extreme values are seen either before serious capitulation or
just before reversals when everyone turns bearish and market reverses on
upside. We have seen over past 3 months that such extreme values resulted
reversals but we would not suggest catching a bottom here. 5845 – 5860 can be
now used as ideal stoploss for short positions and only a move above these
levels will indicate that short term bottom is in place.
Nifty 60 mins
chart shows that prices are moving in a downward sloping red channel and
yesterday’s high was also exactly on the channel from where prices reversed. We
are showing Nifty 10 mins chart as well to understand if the internal wave
counts are corrective or impulsive. As shown we do not see 5 waves but complex
corrective on downside with prices in 2nd corrective pattern.
Yesterday’s selloff broke even the lower trendline of blue channel. At 5720
first correction w is equal to second correction y. This double correction can
also develop into a triple correction. Only a faster retracement of the
previous leg will indicate that the short term low is in place. Till that
happens it is better to position in the direction of trend which is currently
down.
In short, our
bias continues to be negative as long as 5845 is intact on upside. Prices are
now near the Gap area of 5700 to 5750. If prices sustains below 5750 we can
then expect this Gap to be filled.
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