Last week nifty opened at 4844.00 & went down to mark the low at 4827.05 on the opening day itself. It then kept on  moving north  to register the high of the week at 5064.15  & finally closed at 5048.60.Thus it gained 182.60 points over the previous week which is 3.65% approximately.

RETROSPECT: - Two week prior we had gone long FEB nifty future at4755, long 4800 put FEB nifty at170, sold 4600 put FEB nifty at 92 & sold 2lots of 5200 call FEB nifty at 23 with the net debit of approximately Rs 35.We continue to hold the same as it is moving towards its target  of 5200 as per our expectation. We have used the stop of 5010 for the long nifty future.

SENTIMENTS:- Apathy is replaced by disbelief & the feeling of being left out.Sceptism & caution are still  core sentiments with the eye on earning season & RBI POLICY next week.FII had been buyers for the last three week with continuos positive string & they have become aggressive in last week with each day buying figure crossing above 500 crores.Appreciating INR is further enticing them.Nifty is teasing participants by closing  succesively higher each day.This is conveying that throw the caution & buy else I will move higher & you will be left out.Participants are stunned & confused.

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 had called for the bounce to 5000 & above with same has achieved. The momentum did not resolve the alternate wave counts & we will have to watch for sustenance at 5100 & post price behaviour to finalize the wave count. However 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. It has crossed the level of 9275 & heading for the 9650-9910 target zones. The level of 9275 corresponds to level of 5100 in the nifty. In that sense it is leading nifty & obviously it is the event of RBI policy expectations at the root of it.

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.This cycle forces have stretched we see it up till 2^nd Feb,2012.We maintain the same cyclic view & do not find any material change.

SECTORAL ANALYSIS:- We intend to analyse the FMCG sector for the week. On the down below we have attached the FMCG INDEX OF BOMBAY STOCK EXCHANGE. This index has formed the TOP of 4274 on week commencing from 14^th NOV; 2011.it has been rising for almost thee years without any significant correction in the last 10 weeks it has shown the sign of exhaustion. We are envisaging the corrective decline in the range of 3370-3350.This is about 15% below from the present level. We estimate the duration of this decline in 24-30 weeks. We recommend a sell call to re-enter at lower level.

JAPANESE CANDLESTICK:- Last week nifty as well as bank nifty has formed the second (longer)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 sell on ITC above 201  with the stop above 211 for the target of 170 & above  in next 3 months.

(2)We  recommend a sell  on HINDUNILEVER  above of  395 with the stop of 410 for the target of 360 in next 3 weeks.

DERIVATIVE STRATEGY:-  Two week prior 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 recommend a stop of 5010 for the long future.On hitting the stop square up the sell of 4600 FEB PUT in profit & rest should be allowed to continue.

PULSE-READING:-   SOUL VOICE SAYS THAT MARKET MAY UNVEIL A SHARP & SWIFT CORRECTION ANYWHERE ABOVE 5050 & BELOW 5250.EITHER DEPLOY THE STOP OF 5010 OR BOOK PROFIT & WAIT ASIDE FOR SWIFT CORRECTION.

OUTLOOK & STRATEGY:-  WATCH THE 5100 LEVEL CAREFULLY.PROXIMITY OF EXPIRY,RBI POLICY & STUPENDOUS RUN UP CALL FOR PROFIT BOOKING OR ATLEAST DEPLOYMENT OF STOP TO PROTECT THE PROFIT.

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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