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SGX Nifty 7th June 2016
PLEASE NOTE THAT THIS IS MY OVERALL VIEW ON THE NIFTY AND THAT DOES NOT MEAN PRECISE ENTRY AND EXIT POINTS WILL BE MENTIONED IN THIS POST. IF YOU ARE TRADING ONLY ON THE BASIS OF THIS POST PLEASE USE APPROPRIATE RISK MANAGEMENT AND THEN ONLY TRADE.
SGX Nifty / Nifty Futures was seen consolidating in a small range ahead of the Reserve Bank of India policy tomorrow. As per our analysis we do not expect any rate cut in the policy by RBI tomorrow and we expect a word of caution from the Reserve Bank of India. Tonight FED Janet Yellen will more or less just stick to her talk on expected lines and say rate hike will follow but will be data dependent. We do see FED raising rates in later part of this year.
Our overall as per our Nifty Futures Tips given to our clients our Nifty view / Nifty Prediction remains the same that these are not prices to buy rather these are prices to sell and book profits for longs bought at lower levels sure Nifty can surprise a bit more on the upside and I am not denying that at all but I do not see prices sustaining on the upside and post that we are expecting a sharp fall in the Global and Indian stock markets. Overall there are way too many indicators which are showing us that the rally that started on 29th Feb 2016 from 6825 is more or less completed and the broader market breath is also indicating that. If we see the overall stocks hitting fresh 52 week highs has been reducing constantly in addition to that breath indicators are clearly showing us divergences where the Nifty might see a bit more upside but the broader markets are not participating indicating that the rally is more or less done. Momentum has been reducing on the higher side and follow up price action is missing if this was a real tezi cycle there always would have been a follow up tezi cycle but in the current case we fail to see any major follow up buying or momentum. In fact we are seeing volume contraction and that is not a sign of a tezi market.
Over the past 1 week there have been 2 very important astro signatures that have a very high correlation to cycle tops and in our historical back testing we have seen that both these signatures have a combined trend changing capability of over 92 percent. Whenever there has been both of these astro signatures there always has been a sharp reversal in the stock markets in an orbit of 10 trading days in addition to the reversal percentage probability there also has been a decent percentage of decline post these astro signatures. So in the near term the astro cycle also is indicating that markets are more or less at the top and will be reversing shortly. Assuming that Nifty has to reach 8800-9000 in this round then even in that case we still will see a corrective dip of the entire rise from 6825-the current top that will be formed so even if a fresh down cycle does not start immediately keep in mind that a corrective cycle will come. Nifty has already rallied well from lows of 6825 (1425 points ) and now at these valuations Nifty is not cheap any more nor are our larger indicators showing upside. In addition to these the sentiment indicators that we track are showing hyper bullish signals. The very same people who were dam sure about 6500 are now having the exact same conviction about the 8800 target. What has changed? As of now nothing has changed just the perception that a good monsoon will fix all the problems in the economy but the reality is that this has not been a local rally and that needs to be kept in mind. The rally has been a global rally and therefore tracking much of the local news is not a good idea it must be kept in mind that the global context has to be taken into account. The Global stock Indices charts are showing a top out sign and once they do start reversing all global markets will start falling together. We expect that to happen before the next round of tezi cycle starts.
Good Trading To You!