Bottom Line: Indian
Equity markets look to be giving a big Thumbs UP to upcoming election outcome.
Exit polls even though unreliable only added fuel to fire!
The below research is published by Waves Strategy Advisors in daily publication "The Financial Waves short term update". In addition to Nifty there is detailed analysis on Bank Nifty, Reliance Industries big triangle breakout and Grasim Industries. For subscription options visit http://www.wavesstrategy.com/index.php/store.html
Nifty Weekly chart: Scenario analysis
Nifty daily
chart:
Wave Analysis:
Nifty had a Gap up
opening yesterday of nearly 70 points after the exit polls declared a clear
victory by BJP led NDA and the worse performance by Congress after many years.
A Gap up of this magnitude is seen after a long time and the daily chart shown
above clearly highlights such movement was not visible since the rise of 5980.
It seems past week was relatively quiet except Friday when Nifty showed a
spectacular up move of almost 200 points. Move of such magnitude cannot
terminate an existing trend and there is more steam left to the rally.
Even though the move
has been largely driven by the event the steepness of rally indicates positive
sentiments so far. On weekly basis, previous week’s low near 6640 is extremely
important and as long as this level remains intact the medium term trend will
be positive. A simple bar technique combination is important along with Elliott
wave from trading perspective especially when markets are at life time highs as
there is no previous price resistance zone.
The Elliott wave
counts is suggesting 2 different possibilities. Prices have either completed
the 6 year long correction since 2008 in form of triangle and next big leg on
upside has started or currently wave (x) is still ongoing. If the steepness of
rise continues even after 16th May the odds will drastically increase
in favor of triangle pattern and start of next Bull Trend. Nifty daily chart
shows internal wave counts over short term. Even if the up move is in
corrective fashion the trend still remains positive as long as 6850 is
protected on downside. This level is close to previous pivot high and also near
61.8% retracement of move from 6836 to recent high. So as long as 6850 is
intact please refrain from picking a top as the momentum is very strong so far.
On upside 7250
level can result into minor profit booking as this is near the channel
resistance and also the first corrective pattern w = 2nd corrective
pattern wave y near 7220 level. So this zone can be next possible target on
upside. On downside the psychological level of 7000 is now important support.
Break below this will result into sideways consolidation rather than downside
since a rally of such steepness cannot terminate a major trend on upside unless
it’s a blow off which is very euphoric and rare.
In short, either of
the scenarios impulsive or corrective suggest that the trend as of now is
positive and volatility can be on rise as we are near the major event. It is
everyone’s guess that market has completely discounted Mr. MODI victory or once
the news is out as expected there will be a euphoric rise atleast for 2 to 4
days. A detailed explanation on the election analysis is given in current
Monthly’s report. Unless there is negative close on weekly bar below previous
week’s low the trend will remain positive on Nifty!
For subscription to daily research report "The Financial Waves" and long term forecast and stock ideas from investment perspective visit http://www.wavesstrategy.com/index.php/store.html. Register yourself at http://www.wavesstrategy.com/index.php/contact-us.html for FREE daily updates.
No comments:
Post a Comment