NIFTY finally managed today to break the Descending Trend channel that it had got into on 09-Nov-2011. In this carnage NIFTY has managed to lose 739 points (From highs of 5400 to lows of 4639. For the Short Term, Reference points for Swing High would be 5400 & Swing Low would be 4639.
Today was also F&O Expiry for November series. NIFTY made a dramatic short covering rally in the last hour of trade to pull back from the lows of 4639 to close at 4756.
NIFTY Hourly Chart:
Few Observations:
1. Tomorrow's closing would be very important for the bulls. If they manage to stay above the trend channel & close above today's close that can be a good confirmation for next week's relief rally. But if we do not have a strong close tomorrow then Bears can take control. Morrow being Friday, bears would want to lighten up their positions before the weekend & review the situation after a meaningful pull back.
2. If this relief rally indeed comes, How far can it go? The levels have been marked on the charts with the help of Fibonacci Retracements. One can atleast expect pull back to notch up at least to the levels of 38.2% - 50% of the entire fall from the swing highs to lows. So roughly this rally can at maximum extend to 4950-5050 levels. In better than expected global markets & USDINR falling few more cents we can extend this rally to 5100 levels. But these are too far fetched targets. Immediate target for bulls would be to have a strong closing tomorrow.
3. If NIFTY manages to breach 4639 on the downside intraday (Or closes below 4700) then there can be a sudden fall that can take index down to 4550 levels and further down.
4. What can halt the Bulls march tomorrow? GDP numbers for Q2 are expected to come out tomorrow. GDP numbers would act as a catalyst for NIFTY's direction tomorrow. Expectations from the Economists are sub 7% levels. For Q1 the numbers stood at 7.7% (Don't be surprised if this number is revised on the lower side tomorrow) . Last time we saw sub 7% levels on GDP was during Jun'09. So this would be the lowest levels since 30 months.
3. If NIFTY manages to breach 4639 on the downside intraday (Or closes below 4700) then there can be a sudden fall that can take index down to 4550 levels and further down.
4. What can halt the Bulls march tomorrow? GDP numbers for Q2 are expected to come out tomorrow. GDP numbers would act as a catalyst for NIFTY's direction tomorrow. Expectations from the Economists are sub 7% levels. For Q1 the numbers stood at 7.7% (Don't be surprised if this number is revised on the lower side tomorrow) . Last time we saw sub 7% levels on GDP was during Jun'09. So this would be the lowest levels since 30 months.
5. On the other hand Sensex & USDINR have got into a kind of a race with Indian Ace Cricketer - Sachin Tendulkar. At the low of the Day Sensex was at 15480 & Sachin's test runs stands at 15153. USDINR is at 52.26 while Sachin's Test Average is around 56.
Big Question is who will catch who first? ;-)
Going by the charts of markets, Sensex would catch Sachin sometime in near future. USDINR & Sachin's Average wont be meeting anytime unless there is capitulation in World markets.
Talking of Strange coincidences - Here is one - Harvinder Singh a youth who had slapped former Telecom Minister Sukh Ram few days ago, did it again by slapping Sharad Powar & immediately after this the Markets pulled back close to 120 points till the close. Although i do not endorse violent means to achieve the goals. But its time some of the corrupt politicians get such medicines.
First it was Sukh Ram, Next it was Sharad Powar, Who is next - Loud Mouth of Congress?
Talking of Strange coincidences - Here is one - Harvinder Singh a youth who had slapped former Telecom Minister Sukh Ram few days ago, did it again by slapping Sharad Powar & immediately after this the Markets pulled back close to 120 points till the close. Although i do not endorse violent means to achieve the goals. But its time some of the corrupt politicians get such medicines.
First it was Sukh Ram, Next it was Sharad Powar, Who is next - Loud Mouth of Congress?
Supports & Resistances - 4639 <- 4705 <- 4756 -> 4813 -> 4922 -> 5009
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