Detailed Nifty Analysis 21 Sep 10

Flashback, First. On 5/8/10, we sent a file to over people via different networks and lists. The file can be still downloaded at Also post that, we published an article on Nifty:

Presentation became Present…! “If it breaks 5555, we can have next phase of rally which should not stop before 5800.” See Yourself!! PS: We just don’t give our OPINION or FEELING or PERSONAL TGT… Instead we provided complete data, with charts!

Nifty and ActiveTrades Longed at 5380 for tgt hits Longed at 5480 for tgt hits, sold SL 5565 Covered at 5350, Went long. Booked long Longed at hits Note: 5380 long, 5552 short, 5565 long were given vide PPTs and articles. Rest other were delivered real time to clients and social networks.

Now you will miss something. Guess What?! Since our first PPT (4400 Nifty), we have been continuously saying about 6000 Nifty Long Term Target…. And see it happened!!!!! And all this with proper charts and reasoning. Exactly that happened. Our every PPT had this slide. NIFTY LONG TERM TGT HIT!

Nifty Long Term Chart Nifty Long Term Chart: At 4400, we used to suggest target Now that is hit. What next? There is not enough statistical data available that can ascertain the forward movements. A 400% rise then 60% fall has only happened once since 1980 – 1994 (scam). As you can see, markets retraced the prvs high and even made a higher high but remained in the range of effectively. After very long term consolidation, the range broke and markets went up from 1500 to 6300 in a few years! Globally, after any big rise-fall cycle, there happens a rangebound consolidation which takes LONGER THAN THE TIME TAKEN FOR THE MOVEMENT. So, our view remains that in the long term, market might remain rangebound for sometime. Maybe when the world economy becomes “BULLISH”, the range might break and we might be headed towards 10k or 15k on Nifty. But that will take time. Conclusion from the long term chart basic analysis: 1) The long term bullishness is still over. 2) The very long term bullishness is maybe intact. 3) May follow decade.

Observations: 1)Minor support at )Major support at 5850, which should be stop of all longs. 3)Upside targets: 6180, )Basic wave support at )Short term movement: above 6031 tgt 6090.

Reliance Markets rising, and Reliance falling… What combination is that? Everybody including us was surprised by this behaviour of the stock. But apart from long term fundamentals, everything is P: either Physics or Politics. 911 came in US and went, markets made a bottom at 911 and rallied from there. Similarly 911 came on Reliance and it went up. Pun intended. Looking back, it seems: 1)This was a game of bulls and not bears to keep Reliance drifting down. 2)Markets moved on support and compensation by other large caps (rare case) and Reliance kept falling down. 3)All the “other” stocks are not favourite of public. Public still loves Reliance scrip. This kept the public from benefiting. 4)Reliance creates an “image” in minds of people. If Reliance is bullish, there is euphoria. This kept people from buying, and instead many retail traders unaware of 5800 target, SOLD. 5)Bulls may now use Reliance to create rally-part-2 (if happens).

India Mera Bharat Mahan. Bharatiye Share Bazaar sabse mahaan! Jokes apart, can this sustain? If yes, then WHY and HOW? Forget country, forget city, is there even a family who produces on its own and consumes the same without transacting with the world? No! Then, how can there be a complete disconnect with the world? The truth remains: India is a part of Earth, like every other country. Till there is a “growth” (not just recovery/relief) in the whole world, India may not fly at the speed of light. Yes, since it is the best, it will be at a higher premium (which it already is) and may even create higher highs given by other local and or technical factors. But the highs would remain in the domain of the previous highs and the day world starts speaking about GROWTH instead of CRISIS, expect Nifty to be at the level where sensex is today!

Euphoria There was a technical reason as to why and how there had to be a Euphoria above 5555, and that kicked in. This is a state where there is a lot of FEEL GOOD factor in almost everybody. People start spending, traders feel easy to trade, news channels get a new headline everyday… But this is golden period is actually dangerous. “kyunki paise perh par nahi ugte”. To know more about technical observations regarding Euphoria, get in touch socially (Facebook, Twitter, Orkut, Palringo, Website) You can’t sow when its time to harvest. If you sow, make sure that you throw in the seeds of those crops which should grow in the time to come. Else, it will be a recipe of disaster. There are 2 basic rules of investing in fairly valued popular stocks: 1) Buy on major dips, Sell on major highs. 2) Zeroes of today will be Heroes of tomorrow (Auto, IT, Banking etc) So, look for the heroes of tomorrow. Our sugar sector has reaped 30% via variety of stocks incl BajHind. More to come. So has Bharti (280 to 360, 30% up).

FII We see FII has F-Indian Investor. Now FII must be at ease that Indian Investors are finally buying, atleast enough to panic to cover their shorts. Do not think that it is India’s magic and that magic is making market move up… The fact is starting from British Raj, to FII till date, Indians are somewhere “governed” or “affected” by the foreigners. It is the foreign money which is in place and is making the markets move up. The day you see your neighbours buying stocks all of a sudden, get cautious. The day you feel the confidence inside you, the day you miss the fear inside you – be cautious. DII is selling. The day it buys, sell.

Lesson from the past Even though whole staff at ActiveTrades remembers very clearly, I remember it almost tick by tick. I remember, then there was a resistance at 5000, above which there was a target of Above 5500, was At that time, I clearly remember nobody was buying (like today) people were thinking of lower levels and they kept on waiting. At higher levels too they were afraid of buying into. People have a tendency: They get healed with time… If a level holds at the top for a while, they get convinced, and when positive news comes out, they get even more convinced. So, after when markets have moved up, expect rangebound movement. Similar happened in 2007 on the day of P-Notes to 5200 something and then So broader price correction should happen only after some time-wise correction is complete. So don’t hurry up for Fresh rallies can also happen in stocks which have not moved.

Summarizing Long term target is hit. Remember, when target hits, that means its time to think differently. On the long term, looking at the past, there could be range of 50%-100%. Meaning 100 Rs stock to 50 Rs, then 50 Rs to 100 Rs. There could be fresh lifetime highs, but that should be within the domain of this range. On the medium term, upside to 6180 made by parallel channels is quite possible, and above that 6450 is the next target. On the other side, 5990 is a critical support on the FUT and below that there can be a profit booking to 5870 zone remains an important support. On general basis, Reliance looks attractive. India has decoupled (which was a story in 2007, failed then now effective. Like IT sector: failed in 2000, now effective). India cannot create heaven for investors in a weather of crisis across the globe. FII should continue buying till aam aadmi starts buying.

Summarizing Euphoria has kicked in. It will create sense of positivity across everywhere. But this is the time when it is easiest for the player to exit. So, one needs to watch buying/selling numbers more closely than the index. Even if markets don’t move up from 6180/6450, there will be enough opportunities in rangebound consolidation. So we advise to exercise caution on longs, and avoidance of hurry in shorting.

What to do? You can create fresh longs above 6031 for 1% movement upto Above that hold with low volumes for target 6190, exit there. Stop Above 6200 if holds, enter again for target On the other side if holds below 5990, go short for At lower levels, buy again for target 6090 stop Note that there will be updates to these levels and shall be delivered via: Orkut (Reasons & Reflections) Facebook (facebook.com/activetrades) Twitter (twitter.com/activetrades13) Daily Messages (activetrades.in/discussion) Palringo (activetrades.in/palringo) (click mail on

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