It is amazing how Nifty, after crossing the 61.8% Fibonacci retracement level of 4789, has managed to go further ahead thus creating a huge barrier for any fall in the future. Let us see what has happened to the other 2 indices Nifty Junior and Nifty Midcap 50.
Nifty Junior crossed this 61.8% level (9539) last week and has closed well above it (10003.8). Next in line is the Midcap 50 index, and a look at this chart gives an hint as to why action has mainly been in midcaps and not the main index stocks. Nifty Midcap 50 index is currently at 2642, and the 61.8% retracement level of the 2008 crash is at 2857, still a clear 8% away.
It would be safe to say now that the action in midcap stocks will continue till this level of 2857 is crossed.
It needs no Einstein to predict which stocks should be on one's radar - yes, the Midcap index constituents.
Readers can take a pick from the list from here
http://www.nseindia.com/content/indices/ind_niftymidcap50list.csv, and enjoy the ride to beyond 2857.
That does not mean, other stocks will remain sideways - this is just an attempt to identify the ones that are more likely to rise more in the near future.
Chart of Nifty Midcap 50 attached.
I guess bulls want to prove me wrong when I said this might be a month of consolidation.
If Nifty futures decisively crosses 5150 and stays above it, it has a clear 220-230 points path to travel.
Who better to lead this lap than the leader himself - Reliance Industries. On crossing 2240 decisively, RIL can go to 2375 - 2400. Some other targets -
Tata Steel - 612
DLF - 533
Powergrid - 127
ICICI Bank - 4 digits
As I said in my last post, bulls are systematically raising the bar (support levels).
Once they crossed 4790, they created a base at 4850, then 4920, and now 5070. It will need some real bad fundamental news, or some disaster to break such strong levels.
I also mentioned, after the red Diwali of last year, bulls would like to celebrate in style this year.
The platform is ready, the stage is set, and bulls are just waiting for the director to call...lights, camera, action.......once the BIG B of the Indian stock market - RELIANCE INDUSTRIES crosses 2240.
Is this is a dream? Cannot be, since, it is just 9.30 pm and I am wide awake.
Nifty respected the crucial level of 4920 - 4930 by opening well above it on Monday, and shook off intra day bulls who were trying to trade with tight SLs and marched away to glory to close above 5040.
However, options data for this month suggests that bulls want to consolidate either for the full month or at least a few days, and might be also playing games with bears, who start going short merrily on a fall of 20 points, to get trapped later.
Those familiar with the sport - High Jump in athletics, will draw a similarity with what Nifty is doing for the past few weeks / months - raising the bar (support level), and creating fresh supports almost every week.
Stocks to watch - RIL again - a close above 2225, can target 2375, HUL above 295 can target 305 - 312 - 322 and ITC going for 282.
NIFTY is at a do-or-die level and standing on a cliff. As seen from the chart, the low on Friday was bang on the trend line right from the March 2009 lows, from where this rally began. Bulls have a huge task on their hands right now, and they will try to protect this level with all their might. Interestingly, 2 main index heavy weights – Reliance Industries and SBI are also poised at extremely critical levels.NIFTY has to cross a big hurdle at 5000 – 5010 first and then close above 5040 to ensure safety of the uptrend.The DOW has helped on Friday night by closing above an important level, and NASDAQ has a logical target of 2215 (2139 now).After having done all the hard work over the last 7 months, Nifty needs to protect Friday lows on a closing basis, to head for the logical targets of 5175 – 5250 – 5295 and finally 5545. The Vidhan Sabha elections in Maharashtra will not help bulls, since a holiday in between with global markets working, leaves our markets vulnerable for a gap down. Keeping all this in mind, Nifty needs to close ABOVE 5040 tomorrow. If it fails, traders would be advised to remain light before the holiday and take a fresh look on Wednesday. It was quite a forgettable DIWALI for bulls in 2008. Will they make it sweet in 2009? The next few days will have an answer to this question. Watch RIL and SBI over the next few hours.
