Monthly Charts of Indices - 01-Dec-2011

NIFTY & BANK NIFTY - Moving Down the Cliff in a controlled way

Today the November month ended.  Where are we headed in terms of NIFTY & BANK NIFTY on the monthly charts. Well this adjacent Traffic Signal should indicate roughly which way we are heading.

Although we have done with most of the drive down the cliff. The final round of driving down the cliff may be couple of months ago.

NIFTY:

Observations:

• NIFTY has had a red candle for the month of November. 
• NIFTY is moving in a Descending Trend Channel (Marked as DTC-2 on the charts) of ~800 points. Currently its at the lower end of the range. 
• NIFTY has completed 13 months since the Top of 6339 (Nov'2010). NIFTY hit a new 52-week low of 4639 on November'2011. Around 4550-4650 there are multiple Tops & Bottoms on the Monthly charts.
• The Rising Trendline (Marked as 1 in the Chart) is currently at 4450 levels. On any further downfall this trendline can provide good support. On Breach of this the next support comes in at 4200-4300 zone (Zone of multiple tops & bottoms).
• NIFTY in it's previous downmove from Jan'08 to Mar'09 (Marked as DTC-1 on the charts) spent roughly 13 months in the channel before breaking out of the channel on the upside.
• When in a downtrend, the volumes on the Negative closing month are higher than the Positive closing month.
• Indicator: RSI too is making lower highs & lower lows & is below the signal line. Once the RSI line (Green) moves above its Signal Line (Red) things would become bullish. Till then this slow & grinding down move seems to continue for few more months.

How would the Coming Month (December'2011)  Be?

December by far has been the best performing month in the last 20 years. Out of past 20 years on only 3 occasions we have had negative closing in the month of december. So if one goes by history we should have a Green Candlestick for the month of the December.

BANK NIFTY

The annotated Chart is self-explanatory. Watch the 8200-8300 levels closely. A close below this level would open up the area for a target for 7200 for Bears.

Bottom Line:

Keep in mind the Channel values. (For NIFTY to break the lower end of the channel, there has to be panic in the world markets - Similar to "A Lehman Point" ). Till then it can be a grinding & a slow bear market.  Its not as fierce as the previous down move which was swift in both the fall & rise.

Levels to Watch on the NIFTY - Closing Below 4675 (Bearish)

Levels to Watch on the BANK NIFTY - Closing Below 8300 (Bearish)

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