Detailed Nifty Analysis 12 Oct 09

In the last presentation…“4700 is THE LEVEL. If sustains, Nifty should rally. Support 4550“

Nifty moved exactly as advised.

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“Nifty target 4900, 5100-5200”

TARGETS HIT. High 5112.

You can download the pps at www.activetrades.in/downloads/Nifty1199.pps

Nifty Long Term Chart

Nifty Long Term Chart: As it looks clear from the chart, the long term bullishness of Indian markets is still very much intact. The earlier supports are now resistances. Stiff resistances.

See the effect of it

As and when R1 brokeNifty went to R2.

Meaning 6000 again??Conclusion from the long term chart basic analysis:1) The long term bullishness is still intact.2) The R2 4400 is now broken, though insignificantly, leading way towards R3.3) The R3 stands at 6000+

After hitting the targets

Nifty after hitting our targets 4900, 5100, went out of steam suddenly, Saw 4970 odd and got range bound.

Dow Jones: The most underperforming index for valid reasons. The market of US, the biggest equity base, the epicenter of the meltdown.

It has moved only a few thousands from the lows. Now it is standing at a critical level of 9876-9900. It is a strong resistance. If and when it breaks on the upside, target 11000.

Watchout!

Nifty Med Term Chart

The medium term support is STILL intact.The current level is 4930, which should be the Final stop of all longs.

The upside momentum is drying up.The momentum is drying, but it isStill moving up.

A clear Head & Shoulder formed,Which will activate at 4930.

Target TILL 4930 holds: 5130-5170, 5252, 6000.

Summarizing the medium term view, we see that the momentum is declining, which is giving way to divergence in the system. The support has been always a solid support in the

whole rally, and it is acting at 4930 now. Till it holds, the upside should continue. We can see 5130-70, 5252, 6000 and even more. This might sound too un-realistic, but it is possible.

The 4930 support is also shared by the HS formation that is clearly visible from a naked eye.

If 4930 breaks, it can mark “start of a correction”. It might see a sharp downmove of 100-200 points and then a recovery. It might get ranged bound also. But the overall view would

then be BEARISH.

So 4930 is “THE LEVEL”

Infosys Vs Reliance

Reliance is bullish. Even technicals don’t seem to be an issue for the nation’s pride. After giving bonus, MDA said that it is going to start a fresh value creation journey now.

If he is to be believed, we expect the stock to start a new chapter of its life with fresh new businesses, growth and journey.

The reason we are saying this is that Infosys moved from 1849 (june 6) to whopping 2400 few weeks back,

Reliance did not move beyond 2300 that it was on June 6. The contributors of the rally after June 6 are therefore different.

FII Inflows

FIIs have suddenly started pumping in a lot of money. This reminds us of Dec 2007. They were then pumping money in like anything. What happened next is history.

Markets have rallied from 2500 to 5000+, that is 100%. Maximum people were left out and they just watched the rally. Some who bought at 2500, booked out early. Now people are buying, for their own reasons.

Will Nifty goto 10000? Or even 7000? Seems difficult.

There are always 1000000 more people to take the last 10% upmove.

Summarizing

Monsoon issues came and went by. Fiscal deficit of India is rising at an alarmingly high pace. Food inflation is making the RBI uncomfortable. Interest rates don’t look as if they are headed down. There is room for upside in interest rates now. People are spending well. As we pointed out an year ago, India had the fear of recession that people stopped spending, which led to a slowdown. Now that has changed.

4930 is the level. If breaks, it might fall sharply or it might get range bound and after a few up down movements, it might lead to a correction. If 4930 holds, upside should continue smoothly.

Reliance treasury has sold some of its holding. Why? We need not explain.

The biggest money that is made, is not made by investing for last 10-15%, but by saving money and making cash available to invest in crash. Usually when it crashes, we are completely invested, and we are left with no courage to invest fresh cash. Change it.

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See how precisely we advised, and we even sketched the forward chart…

And see the future movements indicated by grey and red. You can read the complete report at the Nifty View page.

The actual chart… It is an old chart. Now Nifty is around 4600+