Software & Finance

Nifty Apr 2011 Technical Forecast

Mar 31, 2011 - Nifty Closed today at 5833.75 which is up by 9.38% for month to date (compared to Feb 28th 2011 Close of 5333.25).

With reference to my earlier update , I have mentioned that Nifty consistently retested support level of 200 days EMA. Mostly after these topping process, the market leads to wild swings and panic selling.

But due to Unexpected Japan Earthquake and poisonous nuclear radiation leaking, world markets was in panic selling. This is totally an unexpected event. When these kinds of event occurs, if often leads to panic selling followed panic buying on short covering rally. This rally can be correlated with Newton's Third Law of Motion - (For every action, there is an equal and opposite reaction). Deep Panic selling triggered a huge rally. This is what happened in Nifty.

On Mar 21, 2011, Nify sets its low point for March at 5,348.20 that erased most of the gains obtained in first two weeks of March. In the last two weeks, Nifty gained more than 8.00% which was significant.

To watch Nifty Index in google finance, visit the following link:

NSE Index in Google Finance

April 2011 Analysis - Do not trust this rally

Now Nifty technical indicators are again giving a strong bull signal and it is on the way to retest its peak level set on Jan 4, 2011 peak at 6,181.00 (350 points up from today's close) and Nov 5, 2010 peak at 6,338.50 (500 points up from today's close).

However Nifty is vulnerable for sudden debacle in the coming weeks. I am not saying that Nifty will not go up from the current levels. It may go higher before it legs down. However if you are a conservative investor, then it would be excellent time to liquidtate your position.

Only if you are day trader, you may consider taking a long position with tight stop loss.

If you are a long term risky player in the market, then you can initiate short position and accumulate short position gradually in the coming weeks. You can not expect return in the short term.

If you are a long term conservative investors, then you have to switch your investment strategy and move on the Fixed Income Securities - Govt. Bonds, Fixed Deposit, etc.

Nifty is good to STRONG BUY for conservative investors only it encounters a deep correction which I expect it to go all the way down to 4800 which was set on Feb and May 2010.

Technical Indicators

10 days EMA: 5648.27
21 days EMA: 5571.90
50 days EMA: 5580.25
200 days EMA: 5565.90

Next Resistance Levels:

strong resistance level at: 6,181.00 - Double Top (Around 350 points up from today's close) set on Jan 4, 2011 strong resistance level at: 6,338.50 - Double Top (Around 500 points up from today's close) set on Nov 5, 2010. 50 days EMA: 5612.62

Next Support Levels:

strong support level at 5580.25 (50 days EMA)
strong support level at 5565.90 (200 days EMA
strong support level at 5402.40 set on Aug 31 2010
strong support level at 4806.75 set on May 25, 2010
strong support level at 4718.00 set on Feb 05, 2010

Posted on Mar 31, 2011