It is advisable to use the Nifty as a benchmark for our Equity Markets. It is widely traded and shows the highest volume along with all it’s derivative products.
I will mainly be using the Elliott Wave Theory for my analysis for the long to medium term aided by other momentum indicators to substantiate for the short term.
Position of the Nifty : Only The Elliott Wave can precisely pinpoint the exact position of any index with a view of the probable direction. This position holds the key for all future studies. An erroneous study will take us on the wrong path and naturally suffer losses. It is for this reason that the location of an index has been the bone of contention between many Elliotticians. Many differ on the wave count and therefore the position.
Anyway, I will try to keep it simple and put forward my analysis : The Nifty is presently in minor wave 5 of Intermediate wave (1) of Primary wave (I) of a new cycle which started in March 2009. It completed minor wave 1 at 4693 in June 2009, followed by the corrective minor wave 2 in July 2009. Minor wave 3 started here at 3919 and rose steadily to 6388 till Nov’ 2010. Minor wave 4 went into a long period of correction down to 4531 till late Dec’ 2011. Minor wave 5 started here and still continues and has a minimum target of 6700.
Analyzing minor wave 5 further would mean dissecting it as follows : Sub wave or minute wave i of minor wave 5 ended at 5630 and minute wave ii declined to 4770 (75% correction of the previous minute wave i. Minute wave 3 extended till 6112 followed by the minute iv correction to 5664 It is here that minute 5 started and we are presently at 5863. ( It is advisable to refer to a Nifty EOD chart simultaneously).
The index has just risen above its 10 and 20 days simple moving averages. The RSI is at 48 and still rising. The ADX is at 27.59, with the + DI @ 33.27 and – DI @ 18.11 which is very positive, suggesting a new rising trend. The On Balance volume is at 2281 and rising .
Combining all the data at hand, it is safe to assume that minor wave 5 has a minimum achievable target of 6700 in the coming months, albeit, for its minute corrective waves along the way, which I will analyze closely and keep my posts updated.