IS NIFTY RIPE FOR CORRECTION?                

                               Last week nifty opened at 5382.10 & went down to mark the low at 5351.40 on the opening day itself. It then kept on  moving north  to register the high of the week at 5606.70 & finally closed at 55564.30.Thus it gained 182.70 points over the previous week which is 3.45% approximately. It is pertinent to note that nifty has consecutively closed higher 7th 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. The expected correction did not materialize & it kept on rising. For the coming week we are anticipating a significant correction anywhere below 5700 level & in accordance we will act with the derivative strategy outlined below.

SENTIMENTS:- With nifty sustaining 5500 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 problems 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, are smiling & aimimh for higher targets.Many analysts & brokerage house have come out with the double top target by year end.Conversely participants,who are hard core bear at heart & left out, are beating the drum of no change in fundamental, 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 5500,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. On the chart below we have shown the internal lower degree wave count. In accordance with the wave labelling, last week’s expected blow off rise has either run its course or may register one more high above 5606.70(not above 5700).  Such blow of rise, are extremely difficult to anticipate, calculate their target & trade. Even they are faster in retracing the rise. We take roughly the target of 5650 & supports at 5325.We have drawn a trend line in orange colour & breach of this will be the confirmation of commencement of correction. These corrective zones will provide the opportunity to consolidate the gains made so far & prepare for further leap in weeks to come.

From the last three weeks 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 4220-4300 as strong support & 4470-4570 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 20th Feb 2012.This cycle force should turn down in a day or two & likely to remain down till 14^th March, 2012.This has been shown in the chart above as red colour block in the indicator window.

SECTORAL ANALYSIS:- We intend to analyse the BANKING sector for the week. On the down below we have attached the CNX BANKING INDEX OF NATIONAL STOCK EXCHANGE. This index has outperformed the nifty & appreciated more than 50% from its recent low in DEC, 2011. It is about to hit the roadblock resistance at 11400.We are expecting 25% correction of this to 10300-10500 in next 2-4 weeks. We recommend profit booking at this level to re-enter at lower level.

STOCK-RECOMMENDATION:-  

(1)We  recommend a SELL on SBIN above 2450  with the stop of 2530 for the target range  of 2140-2200  in next 5-7 days.

(2)We  recommend a SELL  on SYNDICATEBANK  above  120 with the stop of 125 for the   target of 110 & lower  in next 8-10 days.

JAPANESE CANDLESTICK:- Last week NIFTY as well as CNX 500 has formed the seventh higher weekly closing. 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 decisively  crossed this falling channel,signalled the change in intermediate trend & threatened the change in primary trend..It is quite natural to expect the pull back of this break out for sometime.In fact the lesser the extent of pull back stronger the breakout & whole of the last week it eluded us of the pull back.This is the precise reason we expected the blow off rise in the last week.However we are expecting the pull back to commence during this week.

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

DERIVATIVE STRATEGY:-  On any  rise above 5650

(1)Sell nifty March fuure above 5650.

(2)Buy 5700 call March around 132.

(3)Sell 5900 call March around 60.00

(4)Sell two 5300 put March around 63.00.

Use 5750 as the stoploss line to close the all legs.At 5400 all legs can be booked to avail profit.

JKD SOULVOICE:-   JKDSOUL VOICE SAYS THAT INVESTORS SHOULD BOOK PROFIT ABOVE 5630 AHEAD OF EXPIRY & WAIT ON SIDELINE TO ENTER AT LOWER LEVELS. 

OUTLOOK & STRATEGY:-  BOOK PROFIT ON ALL LONG AROUND 5630 & AVOID SHORT SELL EVEN THOUGH WE ARE EXPECTING THE  CORRECTION.NEAR 5350 GO LONG WITH THE STOP OF 54000.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.           

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