05, JUNE
Nifty 2091.35
As written in my previous newsletter, Nifty didn’t violate its earlier low and it is a strong bullish pattern. The price pattern that unfolded since suggests that Nifty would sharply move towards 3300 region or it can once again test 3050 region before moving up. After testing the high of 3280, Nifty came down to test 2937 in five trading sessions. So, Nifty should move above 3280 region in another 4 trading sessions and if it does so, higher targets are in store. The stop for the longs is 3000.
The last upmove from 2963 to 3099 is slower than the previous downmove. For the market to move further up, the last upmove should be faster than the previous upmove. Only in cases of last leg being a running pattern, the last upmove can develop as slow pattern and then suddenly it can pick up momentum in the upside. So, Nifty to continue its rally, we should see a strong rally immediately towards 3300 levels from today. On the other hand, if it once again enter below 3000 level or if it fails to clear 3150 level sharply, then the market would be choppy for some time. If that is the case, then avoid holding long position for the time being.
Of all the bullish counters, Acc and Reliance could seek higher levels quickly. Hedge any positions using Options or use appropriate stoploss as the market will be volatile.
Earlier, it was writtern that though the level 3050 was also breached, the trading pattern for the past few trading sessions suggests that Nifty was in the last leg of this correction. Now the possible range for the last leg to get completed was quite wide. In some cases, if the market is strong, it will not go below its previous low and here it should not go below 2896. In some cases, a new low will be formed within few points below the previous low. In this case, Nifty could form a bottom around 2850. In some cases, the low is formed at double the length of the previous rally. Here the previous rally moved up 380 points and another 380 points fall below the low of 2896 is the maximum possible correction.
With almost all the individual stocks already retraced by 33 percent, a drastic extended downside fall in Nifty seems unlikely. Chances of Nifty holding the bottom of 2986 is the most likely scenario.
In a medium term view, it seems that Nifty has botttomed out around 2986. If this bottom is not violated here after, then we could see a sustained rally towards 3280 region initially and then to 3780 region in coming weeks. Once Nifty tests a new high in coming weeks, it foretell a massive rally in the Index, probably the fastest in this bull Market.
