Nifty Weekly Forecast Starting August 15, 2011 - Time to go long after re-testing 4800-4900 again
August 12, 2011 - Nifty Closed today at 5072.95 which is about 138 points down from the last week close of 5211.25 on August 05, 2011. Even the weekly close is down by just 138 points, Indian market experienced a wild swing along with US and Europe markets.
Last Week Analysis
With reference to last week forecast, I have mentioned that "Nifty would be a good buy when it reaches 4800 levels and Nifty technical levels suggests more correction ahead towards 4800 level" which came exactly true last week. Last week low point is 4946.45. Many times it happens, just before reaching the strong support level(4800 in this case), many impatient investors will jump into the market for buying. But based on history, there will be one more retesting of 4800 range before Nifty makes a powerfull rally in the mid-term (2 months time).
Last Week Low: 4946.45 (Refer to the strong support level 4800)
Last Week High: 5,204.20
Nifty technical levels suggests one more retesting towards 4800 level before powerful rally.
A good news for long term investors is they can take 5-10% of their investments into stock positions by going long. But do not expect a return in the short term. Currently it is on oversold condition, a nice rally is more likely. Try investing in high dividend stocks. However if you do want to take any risk, then wait for Nifty to touch until 4800.
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. There might be chance for double dip in Indian Market along with world market correction. With double dip, Nifty is expected to touch 2600 levels set on Oct 2008 and Mar 2009. Wait for some more time to get more clues on "double dip on Nifty"
For Speculators and Intraday Players - Go long with Hedging (Option Strap)
I expect the Market to make at least one more retesting of 4800-4900 range, before it makes a powerful upward move.
1. Long on the market and hedge using long put options - known as long position with put hedge.
2. Buy 1X times of put options and 2X time of call option - known as option strap.
Next support level for Nifty is 4800 range suggests taking long position on the market.
10 days EMA: 5227.40
21 days EMA: 5346.57
50 days EMA: 5449.79
200 days EMA: 5639.45
Next Resistance Levels:
Resistence level at: 5225.80 set on Feb 10, 2011 and Jun 20, 2011
Resistence level at: 5346.57 - 21 days EMA
Resistence level at: 5449.79 - 50 days EMA
Resistence level at: 5639.45 - 200 days EMA
Next Support Levels:
Strong support level at 4806.75 set on May 25, 2010
Strong support level at 4718.00 set on Feb 05, 2010
Strong support level at 4003.90 set on Jul 10, 2009
Strong support level at 2620.10 set on Mar 06, 2009 Will reach here with double dip
Strong support level at 2584.00 set on Oct 24, 2008 Will reach here with double dip
Posted on August 14, 2011