NIFTY COMPLETED THE CORRECTION?OR DEEP CORRECTION?

      Last week nifty opened at 6101.25 &  then went up to 6151.30 to register the high of the week. It then declined  to mark the low at 5937.10 & finally closed the  week at 6017.70.Thus it lost 48.35 points over the previous week which is 0.8%  approximately.

RETROSPECT: - Last week we were in neutral mode.

SENTIMENTS: - There is certainly optimism & positive sentiments with the existing factors.This has been further strengthened with the  oversubescription of mega issue of COAL INDIA.This only shows there is deep quench for the quality paper & funds chase them.However the 6300 level & balance earning season announncement is keeping the check on positive sentiments to turn to euphoria.

ELLIOT WAVE THEORY: -   At 6284.10, nifty has terminated a wave pattern. The inception of this wave pattern can be taken from two bottoms 4786.45 (25th May,2010) & 5348.90 (31st Aug,2010). Last week we had shown two probable correction  moderate & deep. In the daily chart below we have shown two probable wave counts in dark green & blue  colors.  Currently unveiling corrective wave's characteristics will largely determine which is the most likely wave structure. A very sharp ,swift & deep correction to 5500 will confirm the dark green color wave count which we put as 25% probability. A moderately deep correction to 5926-5816 range will confirm the blue color wave counts. We have assigned this as 75% probability.

On the larger time frame the weekly chart we have shown  the most probable wave count. However to elaborate on this we need some more unfolding of price data  with which hopefully we should be able to throw better light on course of the action in the market.

JAPANESE CANDLESTICK:- Last  week it formed the the small body black candle after INVERTED HAMMER &  the GRAVESTONE DOJI pattern. We are expecting such whip saw corrective move to continue for another 2-3 weeks.

CHART PATTERN:-  The upwardly tilted RECTANGLE FORMATION has been breached on upside.This is the 10-12 months consolidation within 700-800 points.The break out from such pattern has far reaching consequences on the next move.The present run up has met all the conditions of genuine break out.

OSCILLATORS READING:-  The daily RSI & MACD has  turned down from the over bought levels  & indicates the short term  bearishness to continue.The weekly RSI,STOCHASTIC & MACD  have remined overbought  but turned south ward & deny any major correction on the downside.

SECTOR ANALYSIS:-  This week we are analysing the FMCG sector.It has been correcting for last three week.This correction looks to be over as seen with the turn up in stochastics indicator.We see likelihood of it appreciating from the present level of 3700 to 4200.

STOCK RECOMMENDATIONS:-              

(1) BUY TITAN NOV FUT AROUND 3575 WITH THE STOP OF 3535 FOR THE TARGET OF 3900 OR ABOVE.

(2)BUY TCS NOV FUT ABOVE 1070 WITH THE STOP OF 1055 FOR THE TARGET OF 1135.

(3)BUY ADANIENT NOV FUT AT 715 WITH THE STOP OF 700 FOR THE TARGET ABOVE 780.

(4) SELL IDFC NOV FUT AT 204 WITH THE STOP OF 211 FOR THE TARGET OF 185.

(5)SELL IOB NOV FUT AT 168 WITH THE STOP OF 174 FOR THE TARGET OF 154.

PULSE-READING:-  JKD SOUL VOICE SAYS  DO NOT WOORY FII MONEY IS IN PIPELINE & IT IS THE WEAK HOLDERS SHAKE OUT.BELOW 6000 IS BUYING OPPORTUNITY EVEN IF IT IS DECLINING FURTHER 100-200 POINTS DOWN AS REWARDS ARE WORTH TAKING THE RISK.

OUTLOOK & STRATEGY:-  Keep strict watch on the 5850 for any long position & 6125 FOR SHORT POSITIONS.RANGE BROKEN ON UPSIDE MAY LEAD TO STUPENDOUS RISE. FRENZY HAS JUST BEGAN JOIN THE PARTY & ENJOY IT.