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Nifty Level

Monday, July 30, 2007

NIFTY (4445)

So on friday as expected after expiry of F&O settlement and getting help from all global markets, there was no way for nifty to escape a vertical fall. There were no buyers only sellers. Friday`s turnover of Rs. 24890 crores was the highest for the Nifty ever. The earlier highest was Rs. 22504 crores done on 28-02-2007. Nifty was just testing my patience since last few days, but short positions at 4600 did pay off on friday.

Pivot Point trading levels for 26th JUL is as under.
S2 S1 PIVOT R1 R2
4301 4373 4496 4568 4691

Pivot Point trading levels for the Week 30th JUL - 3rd AUG is as under.
S2 S1 PIVOT R1 R2
4282 4363 4506 4587 4730

10-DMA 4553
20-DMA 4473
30-DMA 4400
50-DMA 4329

Resistances on the way up are at 4503, 4590. Support is at 4364.
These are not for any particular day and are valid for MEDIUM TERM.

So now weakness has set in and it seams for the time being a top has been formed and correction has started. Now these corrections dont last for just one or two days, hence let us examine how long past corrections have lasted.

Correction in Feb 2007 lasted 16 trading days for a 16% fall. (4245 - 3555)
Correction in Mar 2007 lasted 9 trading days for a 7% fall (3902 - 3617)
Correction in May 2007 lasted 9 trading days for a 6% fall (4218 - 3981)
Correction in June 2007 lasted 6 trading days for a 6% fall (4363 - 4100)
So far the current correction is just 3 days old for a near 5% fall. (4648 - 4424 ?)

Now whether this one is a 6% type correction or a much deeper 12-15% type correction, only time will tell. Running corrections last for couple of days. This one is not a running correction and hence will take some time. First of all, according to me, base forming will be seen at lower level and hence volatility will be seen with some wild up swings and wild down swings from the lows whenever formed being a result of a tussle between bulls and bears. The lows will be tested more than once and then we can say that correction is about to get over. Remember, nothing falls in a straight line and hence pullbacks will be seen and I expect a pullback which at max. can go to 4506. Once Nifty breaks and closes below 4400 you will see a further deepening of this correction.

Now for those who have gone short either on friday or actually prior to the fall, should only be worried if Nifty starts trading above 4506 and also if it closes above 4473. This should be the stop loss for those who are short.

Now supports during this correction is as follows.
4550, 4470, 4390, 4310, 4230, 4166, 4102.
During the falling Knife, which supports will hold and which will not, depends on the weight & acceleration of the falling knife (Nifty) and is hard to tell.

Now below para is only for those 106 who were present during the evening session in the chat room on Sunday 8th July.

Over the weekend, you must have heard so many different views in news paper, on TV channels, from brokerage houses, on forums and from various analyst on the internet etc etc and with my one more view as expressed above being added to it, which by now must have totally confused you. Those who were present during that session, just follow what was said by me to the last word and there should be no confusion at all. What happens to subprime or credit concerns in USA or some adverse remarks made by Ben Bernanchi or RBI governer, FM etc etc, you should be least bothered, because you are very clear and focused in what you are going to do after having heared me in that session.

Posted by FR at 10:00 AM  

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