• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

B. Krishnakumar

NIFTY (1609)

Preferred view: Based on W.D. Gann's approach, the high of 1658.9 formed on August 11 was identified as a key reversal point. This view remains unchanged. The recovery over the past few days appears to be a corrective bounce to the earlier decline.

The Nifty faces strong resistance at the 1616-1627 range. A couple of key Gann angles intersect at around the 1616-mark.

This is likely to act as a resistance zone of the index this week. In terms of time, 33 weeks has elapsed since the high recorded at 2014.65 on January 9.

The Nifty would be into its 34th week from this high and a reversal may be expected as "34" falls in the Fibonacci number series. A change in trend may be anticipated in the August 31 or September two-time window. The bearish view would be subject to Nifty trading below 1658.9. A breach of this level would warrant a re-look at the likely turn dates and price targets.

Comments: After a sharp drop on Monday, the index ruled firm on the next couple of trading days. A "key reversal bar" pattern was completed on Friday, which has bearish implications.

Going by the Elliott Wave Analysis, the index appears, however, to have marginal upside left before the bearish trend takes hold. The expected upward move could take the Nifty to 1620-1625 range.

There is a confluence of resistance at around 1620-1630 range based on Elliott Wave Analysis and W.D.Gann's approach. This range is likely to act as a key reversal zone for the index in the week ahead.

Alternate view: Though the continuation of the bearish trend is the preferred view, the market action over the next few weeks would provide critical clues about the validity of this view.

A close above 1660 would warrant a reassessment of the overall outlook for the index. This will, however, not warrant a change in the turn dates identified earlier.

We maintain that the Nifty is likely to see a trend reversal in the September 16-24 time window.

The near-term downtrend is expected to last till this time frame, and then a bullish phase is likely to commence. The trend could be different if the Nifty breaches the 1660 level before this period. In that case, this time window could, however, mark the onset of a bearish phase.

SENSEX (5117.0)

The easing of crude oil prices in international market imparted positive sentiment in the equity market. The recovery in the index, after a sharp fall on Monday, appears to however be a relief rally. The downward trend is likely to resume shortly on the completion of the last phase of the upward move of the present recovery.

The index faces resistance at about the 5160-5170 range. After a rally to this zone, the Sensex is likely to turn weak. This view would, however, be negated if the index closes above 5270. The price action this week is likely to provide further clues about near-term trend.

Comments: The listing of the TCS was the highlight of the week's trading. Fresh funds could trickle into the secondary market in the near term once investors decide to take profits or reduce exposures in TCS. More than this factor, extraneous events such as crude oil price movement, and the developments on the inflation and interest rate front, could be key factors that drive market sentiment in the weeks ahead.

S&P CNX IT (2318.2)

As anticipated, the index ruled firm and also moved closer to the target zone of 2360-2370. Over the last couple of days, the index was confined to a narrow trading zone. A breakout from this trading range is likely to impart strong momentum. A move above 2345 would indicate strength and a drop below 2280 would have negative implications.

(Note: The analysis and opinion expressed in these columns are based on the technical analysis of the past price behaviour. Opinion and price targets are based on the Elliott Wave Analysis. The stop-loss level provided with the recommendation is important. The original view would stand negated if the stop loss level is breached. There is a risk of loss in trading)

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Investment Quiz

Copyright © 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line