Nifty is likely to Top Out for the Medium Term, 30, July 2010

After Making a high of 6357.10 on January 2008, Nifty went into a medium term correction and it tested 2250 levels by October 2008. From that level Nifty has been in a medium term rally. The higher bottom formed on march 2009, the big gap that formed during the election results in May 2009, and Nifty never closed below 4730 for more than 3 days after september 2009 are some of the Technical Landmarks in this rally.


The technical landmark Gap that formed during may 2009 is offering a good clue about future direction of the market. Normally, the gaps act as the middle of any rally. Taking gap as the centre point, then we can derive an upper target of 5550. The corresponding target is given in the chart below as a fibonnoci projection.



The final part of any rally will always lack momentum. Same is the case in Nifty also. After the may 2009 gap, though Nifty has been trading in high range, it did not see any momentum in the upside. This shows we may be in the final leg of this rally.
 If my assumption is correct, then it should not close above 5550 and also it should correct towards 4730 in another 3 to 6 months. And also, the break of 4730 would foretell a big Bear market after that.


Instead, if Nifty breaks 5550, then it could move towards 5700, without changing the bearish picture. The more it moves above 5550, the more it is likely to fall drastically. 

Nifty Technical Outlook, Positional & Intraday Trading Levels, calls, and tips, 30 July 2010

Today, 5410 is the crucial intraday level for Nifty.

If Nifty sustains below 5410, then it could test 5360 and below that level it could test 5320.
Instead, if Nifty trades above 5410, then it could test 5460 and above that level it could test 5530.

Short term Technical View of Nifty

For the short term, the level 5550 is crucial. If it sustains below this level, then it is likely to test 5100. Instead, if it trades above 5550, then it is likely to test 5650. 

Medium term outlook of Nifty dated on 30 July 2010

The medium term outlook of Nifty would remain bearish if it fails to sustain above 5550. Nifty is likely to see a medium correction from 5550 and it is likely to be in correction mode for another 1 year.

Long term outlook of Nifty dated on 30 July 2010

The long term outlook of Nifty is looking bearish and the present bull market from the low of 2003 is likely to terminate in 2010 around 5550 and it is likely to followed by 2 to 3 years bear market.

Reality, Power, and Infrastructure sector is likely to underperform the overall market. FMCG, Pharma, and Banking sectors are likely to perform better in coming years.