Software & Finance

Nifty Weekly Forecast From Jan 02, 2012 - Start accumulating Long Positions (Expected Trading Range: 4500 - 4872)

Dec 30, 2011 - Nifty closed today at 4624.30 which is about 90 points down (1.90%) from the last week close of 4714.00 on Dec 23, 2011. Nifty was trading between 4608.90 and 4800.50 which is about the swing of 192 points.


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

NSE Index in Google Finance

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

NSE Index in Yahoo Finance

Last Week Analysis - Buyers are getting ready to invest in long term

Nifty was down by 1.90% in the last week. Selling pressure and volatilty is related with Euro and US Zone news mainly related with upcoming elections in 2012. Market volatility may also be related with tax saving as this is the last trading week.


FYI - France will hold presidential elections on April 22 and May 6, followed by general elections in June.
US will hold presidential elections on Nov 06, 2012.


Some investors strongly belive that Nifty short term correction is coming to end. As technical levels are clearing forming the step down pattern of 200 days EMA and then 50 days EMA and then 21 days EMA. It is not a good idea to go short on Nifty as the rebound can happen any time. Go long on Indian T-Bills and INR. Note that Nifty may go down further from this level, however it is not a good idea to short Nifty in the long term. Whenever it goes down, accumulate your long position on the long term basis.


With respect to US long term treasury prices, TLT closed today at 121.15 which a gain of 2.52% for the week compared to last week close of 118.17. US treasury is a getting closer to create short position. US treasuries (Ticker: TLT) would bottom near 100 - 103 and TLT upside would be maximum of 125-130.


Note: US Interest Rate Bottom is currently happening, it may test the bottom in the coming weeks.


Last Week Low: 4,608.90
Last Week High: 4,800.50


Nifty technical levels clearly suggest that liquidate your short positions now. Because Nifty has got strong support level of 4600 and 4000. It is very much unlikely Nifty will go down below 4000 in the short run. There are so many investors waiting to take long poistions on Nifty.


Note: Nifty is risky to short now, even though the next downside target for Nifty below 4500 and 4000. If you have any short positions on Nifty, it is good time to liquidate and keep them as cash. If you want to take long positions on Nifty, You can wait for couple of weeks to see the market trend. If Nifty started moving below 4500, then gradually accumulate your long positions with a ladder of orders.

If you are conservative investors, hold currency or indian T-Bills. You can take long positions on Nifty between 4000 and 4500. Nifty might experience a double dip in Indian Market along with world market correction in the long term (about 2 years). 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 - Bet on volatility

1. Buy 1X OTM put option and 1X OTM call option.

2. Long Stocks and stop loss orders.

3. Long Stocks with long put options


Note: OTM - means Outside the money.

Technical Indicators

10 days EMA: 4698.96
21 days EMA: 4756.57
50 days EMA: 4872.15
200 days EMA: 5232.82

Next Resistance Levels:

Strong Resistence level at: 5232.82 - 200 days EMA

Strong Resistence level at: 4872.15 - 50 days EMA

Strong Resistence level at: 4756.57 - 21 days EMA

Next Support Levels:

Strong support level at 4718.00 set on Feb 05, 2010

Strong support level at 4639.10 set on Nov 24, 2011

Minor Support level at 4531.15 set on Dec 20, 2011

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 Dec 31, 2011