Last week nifty opened at 5163.55 & went down to mark the low at 5076.70 on the opening day itself. It then kept on  moving north  to register the high of the week at 5334.85 & finally closed at 5325.85.Thus it gained 121.15 points over the previous week which is 2.4% approximately. It is pertinent to note that nifty has consecutively closed higher in 5^th week in a row.

RETROSPECT: - Last week we did not get any fresh entry trigger in spite of our outlook turned out to be right. This was mainly due to non-availability of entry with favourable risk to reward ratio. For the coming week we are anticipating a correction to unveil from 5400 to 5100 .We would capitalise on this opportunity if it fructify  & we will act   in accordance with the derivative strategy outlined below.

SENTIMENTS:- With nifty crossing 5200-5300 zone comfortably,pouring FII in flows,recovery all round the gobal financial markets,benign gobal economy flashed improved data,Eurozone on the verge to sort their major problem etc have impacted the paticipant sentiments positively. This was conspicuously absent during the last one year. Participants ,who were hard core bull at heart &  entered long,have come out with band wagon to proclaim irrationally higher targets.Conversely participants,who are hard core bear at heart & left out, are beating the drum of caution & excess liquidity in system & its aftermath.Nonetheless such comfortable feeling has been seen on the mind of market participants after the long time.

ELLIOT WAVE THEORY:-  With the nifty sustaining above 5250,we would  count the move from 6338 (5thNov,2010)  to 4531(20^th Dec,2011) as the ABC correction. We start counting the fresh wave from the 4531.15 & which suffice for our weekly insight. As the wave group are confirmed & stamped we would compact & integrate it with larger degree movements. On the chart below we have shown the internal lower degree wave count. In accordance with the wave labelling there is little room now on upside & it should soon revert back to corrective zone. This corrective zone will provide the opportunity to consolidate the gains made so far & prepare for further leap in weeks to come. We have estimated the 5080-5420 as the general upper & lower boundary of this corrective zone.

 From the last week we are analysing CNX-500 in place of Bank nifty as broad market index & fair representation to mid-cap & small cap stocks. The glaring facts on observation of this chart points that mid-cap & small-cap stocks are more ebullient than the large cap front line stocks. For the week we see 4000-4025 as strong support & 4200-4225 as resistance & rest of the wave structure is similar to the nifty.

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 force is on upside till 6th Feb 2012.This cycle force should turn down in a day or two & likely to remain down till 20^th Feb, 2012.This has been shown in the chart above as red colour block in the indicator window.

SECTORAL ANALYSIS:- We intend to analyse the CAPITAL GOODS sector for the week. On the down below we have attached the CAPITAL GOODS INDEX OF BOMBAY STOCK EXCHANGE. This index has underperformed the nifty for two reasons. It lags in time to the benchmark index & secondly it major constituent BHEL performed terribly badly. Nonetheless we see it heading for the 13500-14000 in coming 12 to 14 weeks & support at 9000-9500.This sector will look cheaper for the fresh money. Its cycle force is hard up till May 2012 as shown in the chart. From the present level this corresponds to 30% gains approximately.

STOCK-RECOMMENDATION:-  

(1)We  recommend a SELL on RCOM around  97.00  with the stop of 99.00 for the target range  of 84.00-87.00  in next 5-7 days.

(2)We  recommend a SELL  on SOBHA DEVELOPERS  around   285 with the stop of 295 for the   target of 260 & lower  in next 8-10 days.

JAPANESE CANDLESTICK:- Last week NIFTY as well as CNX 500 has formed the fourth (longer) WHITE MORUBAZU after PIERCING LINE of previous week, on weekly chart. It is the confirmation of the bullish run extending further. On the monthly chart both the indices have formed BULLISH ENGULFING LINE after a prolonged 12 -14 months decline.

CHART PATTERN:-  In last one year every rally failed to cross the upper line of down trend channel.Last week it has crossed this falling channel & threatened the change in primary trend.It is quite natural to expect the pull back of this break out for sometime & then real fury of this break out will unveil provided this break out is genuine & not the fake one.On the longer term monthly chart it has broken out of the  bullish flag pattern.An upward break out of this can be quite substantial in terms of price.

OSCILLATORS:-  Majority of the oscillators in the  weekly  & daily are clearly in bullish zone.

DERIVATIVE STRATEGY:-  At any decline below 5150 during the week  we  recommend the following strategy with the view that 5000 is the intermediate  bottom & market is headed for the 5600 & above.

(1)Buy nifty MARCH FUTURE below 5150.

(2)Buy nifty MARCH PUT 5100.

At 5000 strategy will be wrong & should be squared off  as stop loss & simultaneously at 5600 & above profit should be booked as target achieved.

JKD SOULVOICE:-   SOUL VOICE SAYS THAT MARKET MAY UNVEIL A SHARP & SWIFT CORRECTION FROM ANYWHERE AROUND 5380-5420 & MAY TERMINATE IN THE 5080- 5150 RANGE.

OUTLOOK & STRATEGY:-  BOOK PROFIT ON ALL LONG AROUND 5400 & AVOID SHORT SELL EVEN THOUGH WE ARE EXPECTING THE  CORRECTION.NEAR 5150 GO LONG WITH THE STOP OF 5000.WE ARE AVOIDING THE SHORT AS THE UNDERCURRENT IS VERY STRONG & CORRECTION MAY BE SHALLOW & SWIFT.

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.