Nifty is off the cliff and January effect on world markets!

Nifty is currently down (3 pm) by more than 125 points (2%). This move has broken below the up leg in faster time. This is a very important price and time confirmation for trend reversal.

Today’s fall is no surprise to our subscribers of “The Financial Waves short term update”. In entire last week we have been cautioning our readers that the downtrend is due and the poor up move was accompanied with absolute no momentum and Advance decline line broke the previous pivot lows when Nifty moved higher thereby providing leading indication.

There are times when predictability increases and all indicators point at same direction. This is one such period and trust me it is not very frequent when most of the techniques are pointing at a single direction. This research will provide you necessary tools to convert this opportunity. Simply visit Pricing Page and subscribe to see where Indian markets are headed from here with charts, levels, indicators, strategy!

On 22^nd January we published a free article on website Nifty at crucial juncture! Is the move up from 5118 nearing an end?

The below article is picked up from today’s morning report and shows a simple way to measure momentum and in previous updates we have mentioned that “Markets are known to be forming tops in January since 2008 except in 2011.” This is January effect on Indian equity markets.

It seems the world markets are finally trending together. DJIA could have also formed an important top but it is too soon to conclude!

Nifty 60 mins chart: (as of 27^th January 3:00 pm)

Following is mentioned in today’s morning report before equity markets opened -

In previous update we mentioned that, “In short, we continue to look at the overall structure as topping with resistance level at 6380. Move below 6280 will indicate minor negativity and if prices fall below 6240 impulsively we will get further negative confirmation.”

Nifty finally broke below the level of 6280 and that too impulsively indicating a possible top near 6355 levels. The fall on Friday was across the sectors and all the major sub-indices includingPharma and IT closed negative.… Banking sector as a whole and especially PSU banks which seems to have started the 3^rd leg down.

The sharp selloff seen across the board finally vindicates and justifies our cautious stand and the up move to top out soon which happened between 6330 – 6380 zone. Today can be a plausible Gap down opening below the next crucial level of 6240 given the strong selling pressure globally.

Indian equity and currency markets were not alone in the fall. Most of the emerging markets closed down by more than a percent with currency deteriorating. Our currency report highlights the probable start of primary wave v on upside in USDINR. ….. The correlation between developed and emerging markets is cyclical and we have observed very low correlation for around 2 years now. The same is due for reversal which means the correlation between world markets should again increase.

On Nifty, the lower …… support is near …… level which is also the level from where current wave c started. So it will be crucial to observe if lower end of the band can turn along with prices on downside to further confirm that a very important top is in place!

Trade Cautiously: This week has important events. RBI monetary policy is due tomorrow. 12 month Bond yields are easing out around 8.67% from 8.84% seen during previous policy meet. Our expectation for the policy ….So Trade cautiously and the bias will remain negative as long as 6320 is intact on upside. On downside …….. is now very important level to be watched.

It is time to get ready for dynamic and volatile environment again.The narrow range bound movement affects our psychology and conditions us to think of 50 to 60 points move on Nifty as big enough. During August – September 2013 we have witnessed moves of more than 150 points. So get ready if that is about to happen again. It is imperative to have the important trading strategies ready before market hours as wide fluctuation can paralyze the objective thought process!

Subscribe “The Financial Waves Short term update” our flagship product that give views on Nifty along with 3 stocks providing good opportunity. There are times when predictability increases and all indicators point at same direction. This is one such period and trust me it is not very frequent when most of the techniques are pointing at a single direction. This research will provide you necessary tools to convert this opportunity. Simply visit Pricing Page and subscribe to see where Indian markets are headed from here with charts, levels, indicators, strategy!