NIFTY MORE OR LESS RULED OUT THE DEEP CORRECTION.

      Last week nifty opened at 6092.30 &  then went down to 6084.75 to register the low of the week. It then rose  to mark the high at 6338.50 & finally closed the  week at 6312.45.Thus it gained 294.75 points over the previous week which is 4.9%  approximately.

RETROSPECT: - Last week we went long on breach of 6125 on upside with the stop of 5935 & holding for the target above 6450.

SENTIMENTS: - The premium listing of Coal india & later two day's price appreciation are  certainly  the factors for elated feeling among the market participants.Added to this the US president's India visit is fueling the exuberance & we are very close to all time high.In short the aircraft of optimism has just taken off the runway of realistic levels.Emotions have started taking larger share in decision making than what it was being taken so far over the rationality & logic.

ELLIOT WAVE THEORY: -   Last week's price action has distinctly ruled out the deep correction & the moderate correction tilting to the shallow correction level is the reality. In the present circumstances inception of the wave pattern can be taken from bottom 4786.45 (25th May,2010). We have labeled the 5477.5 (23rd July,2010)as the top of wave (1) & 5348.90 (31st,Aug2010) as wave (2).The rise from the 5348.90 to 6284.10 can be labeled as complete wave (3) or the wave <1> of wave (3).Similarly decline 6284.10 to 5937.10 can be labeled as complete wave (4) or wave <2> of wave (3).Both these wave counts are bit away from realistic levels either undershooting or overshooting. Each alternative wave count has their strong as well as weak points. Under such dilemma we have no choice but to wait for the further unfolding of price action to distinguish among these wave counts. However at the expense of being called overtly bullish, in our view last week's gaps tilts the favor in the subdivided wave. To keep our bullish exuberance under check we would prefer to wait for one more week of price action before taking any final call.

Last week on the shorter timeframe turned out more bullish than what best we had expected. For the coming week there are two targets on upside 6420 & 6615 with the support zone of 6275-6240.Though 6420 looks more realistic & achievable ,the external parameters favors the unrealistically high wave count of 6615.

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  should be able to throw better light on course of the action in the market.

JAPANESE CANDLESTICK:- Last  week it formed the the long white MORUBAZU candle indicating that the correction has terminated & fresh up move has began.

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 up again at the over bought levels  & indicates the short term  bullishness to continue.The weekly RSI,STOCHASTIC & MACD  have remined overbought  & remined north ward & deny any major correction on the downside.

SECTOR ANALYSIS:-  This week we are analysing the METAL sector.It has been correcting & consolidating  within a RECTANGLE FFORMATION for last 10 months.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 17500 to 22600 & 28100 in short & medium term respectively.

STOCK RECOMMENDATIONS:-  

(1) BUY WELCORP AROUND 263 WITH THE STOP OF 255 FOR THE TARGET OF 295 OR ABOVE IN 4 -6 WEEKS.

(2)BUY RANBAXY ABOVE 620 WITH THE STOP OF 595 FOR THE TARGET OF 790 IN 8-12 WEEKS.

(3)BUY TATAPOWER ABOVE 1430 WITH THE STOP OF 1400 FOR THE TARGET ABOVE 1600 WITHIN 12-14 WEEKS.

(4) BUY MCLEODRUSS AT 231 WITH THE STOP OF 219 FOR THE TARGET OF 320 WITHIN 12-14 WEEKS.

(5)BUY PRAJ IND AT 73 WITH THE STOP OF 70.50 FOR THE TARGET OF 82.00 WITHIN 2-3 WEEKS.

PULSE-READING:-  JKD SOUL VOICE SAYS  IT IS TIME TO COME OUT OF CREASE,LIFT THE BAT & HIT IT HARD FOR BOUNDRY.

OUTLOOK & STRATEGY:-  Keep strict watch on the 5925 for medium term  long position & 6125 FOR SHORT term  POSITIONS.RANGE has been  BROKEN ON UPSIDE,will LEAD TO STUPENDOUS RISE. FRENZY HAS JUST BEGAN JOIN THE PARTY & ENJOY IT.