Last week nifty opened at 4747.55 & went down to mark the low at 4695.45 on the opening day itself. It then kept on  moving north  to register the high of the week at 4898.65  & finally closed at 4866.00.Thus it gained 111.90 points over the previous week which is 2.3% approximately.

RETROSPECT: - Two week prior we had gone long FEB nifty future, long 4800 put FEB nifty, sold 4600 put FEB nifty & sold 2lots of 5200 call FEB nifty with the net debit of approximately Rs 35.We continue to hold the same as it is moving  towards its target as per our expectation.

SENTIMENTS:- Apathy is the sentiment.No one wants to listen or analyse the equity market.Fund allocation is diverting to commodity, currency, bond market & others leaving the stock market as abodoned baby of investment world. Whatever little funds allocated are sitting on tight string of purse awaiting  FII fund flow in new year,3^RD quarter earning announcement,global euro settlement.In short perrenial participants are also extremely cautious.In nutshell conditions are ideal for the rebound or U-turn in sentiments.However in many over beaten mid-cap & small cap stocks corrective rally has brought smart returns in the hands of participants.This has kindled some hope & revival in sentiments from the nadir.

ELLIOT WAVE THEORY:-  As explained in last few weeks we would analyse the wave count from 6338 (5thNov,2010) which suffice for our weekly insight. As the wave group are confirmed & stamped we would compact & integrate it with larger degree movements. We are labelling the 6638-5177 as the wave (A) OR (1) & 5177-5740 as wave ( OR (2).From 5740 it has unveiled wave (C) OR (3) till 4531.15 & on the chart below we have shown the internal lower degree wave count. However last week’s price action has increased % probability of ABC correction but we will give prominence only if nifty is able to sustain above 5100. In the chart below we have given two alternate wave counts from the 5740 in green & red colour. As usual green colour wave count is either bullish or less bearish & red colour wave count is more bearish & less bullish. Both the wave counts calls for the bounce to 5000 & above but we would confirm only after looking at the price behaviour near 5100  & cross above of 5100 will reduce % probability of red colour wave count.

For the Bank nifty the top of 11451 on 8^th July, 2011 corresponds to 5740 of Nifty & essentially, the other wave structure of it is remaining similar. We would watch eagerly the cross above of 9275 to confirm the target range of 9650—9910.

CYCLE- ANALYSIS:- Last couple of week we had given the brief introduction of cycle analysis & our limitation in presenting the same. In spite of these limitations, within limited flexibility we had stated that cycle forces are down till 30^th Dec, 2011. As we stated in our last report we see the cycle forces on upside till 28^th Jan 2012.We maintain the same cyclic view & do not find any material change.

SECTORAL ANALYSIS:- We intend to analyse the METAL sector for the week. On the down below we have attached the METAL INDEX OF BOMBAY STOCK EXCHANGE. This index has formed the bottom of 9191 on 2^nd JAN 2012.We are envisaging the corrective bounce of this decline, in the vicinity of 12800-13000. Of course this rise will have its pause at intermittently & will span over to MARCH end.

JAPANESE CANDLESTICK:- Last week nifty as well as bank nifty has formed the WHITE LONG MORUBAZU after PIERCING LINE of previous week, on weekly chart. It is the confirmation of the bullish run extending further.

CHART PATTERN:-  On the nifty weekly chart  a distorted HEAD & SHOULDER pattern is visible.However there is no clear cut volume confirmation.Traders should be cautious on it as it may fructify or fails & accordingly move the market.In the weekly chart it is just desceding down within the well defined downward channel.In last one year every rally failed to cross the upper line of down trend channel.As long as it is unable to cross, primary trend remains down. However last week’s price action points for the retest of the upper trendline of the channel.On the longer term monthly chart as long as it holds within channel, it is forming a bullish flag pattern.

OSCILLATORS:-  Majority of the oscillators in the  weekly  & daily are clearly commenced turning up from the oversold zone.

STOCK-RECOMMENDATION:-  

(1)We  recommend a buy on JINDALSTEL around 490  with the stop above 475 for the target of 540 & above  in next 3  weeks.

(2)We  recommend a buy  on TATA STEEL on cross above of  425 with the stop of 410 for the target of 490-500 in next 3 weeks.

DERIVATIVE STRATEGY:-  Last week we had  recommended the following strategy with the view that 4531 is the intermediate  bottom & market is headed for the 5200.

(1)Buy nifty FEB FUTURE around 4750.

(2)Buy nifty FEB PUT 4800 FOR THE RS 170.

(3)SELL NIFTY FEB PUT 4600 FOR THE RS 90

(4)SELL 2 NIFTY FEB CALL 5200 FOR THE RS.24.

At 4600 strategy will be wrong & should be squared off  as stop loss & simultaneously at 5200 profit should be booked as target achieved.

We recommend to hold  all the transactions of this strategy as it is moving in the anticipated direction & we do not see any material change for the coming week.

PULSE-READING:-   SOUL VOICE SAYS THAT MARKET HAS FORMED THE CORNER STONE FOR THE MUCH LARGER RALLY ABOVE 5500.AS & WHEN MULTI STAGE CONFIRMATIONS  COME WE WILL CONVEY TO THE READERS.WE HAVE WRIITEN THIS TO KEEP MIND OPEN BUT NOT TO TAKE ANY ACTION TILL FURTHER CONFIRMATION COMES IN.  PARTICIPANTS  HAVE TO BE EXTREMELY VIGILANT AS MARKET IS AT A CRUCIAL JUCTURE OF PRIOR TO A BIG MOVE.

OUTLOOK & STRATEGY:-  WATCH THE 4675-4725 SUPPORT ZONE CAREFULLY & WE  DO NOT SEE IT BREACHING BUT CERTAINLY THE CONSOLIDATION IS MOE LIEKY IN THE COMING WEEK.

THIS IS THE PORTRAY OF GENERAL BROADER MARKET VIEW WITHOUT ANY SPECIFIC STRATEGY & SHOULD NOT BE CONSTRUIED AS SPECIFIC CALLS.FOR THE MORE POIGNANT VIEW ON MARKET,WINNING STRATEGY & PIN POINT TIMELY PRICE LEVEL CALLS, CONTACT US  TO SUBSCRIBE FOR OUR PREMIUM SERVICES.           

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