Nifty Weekly Outlook 30 September’2013

The price action on the weekly chart gave up some of its recent gains and formed a bearish candle with small shadows in either direction. On the weekly chart the index has formed a lower high after four consecutive higher highs signifying selling pressure at higher levels of 6000-6050.

  • The sideways price action in Nifty in the last four sessions saw the index breach the rising trend line in place since August 2013 low of 5118 levels
  • The violation of this trend line signals bulls losing steam in the current scenario. However a faster retracement of last rising segment from 5798 to 6142 which consumed four sessions, has not panned out as the current decline post RBI’s policy announcement also entered a fourth session on Thursday
  • We anticipate the index to remain range bound in the short term between the key pivotals of 6015-5798
  • The time wise behavior of the index since January 2013 also indicates that the up-leg from the August 2013 low of 5118 levels is approaching maturity
  • Seeing as January 2013 all major directional up {or} down moves have lasted precisely 20-25 sessions
  • Since on Thursday the present up move from August lows has already consumed 20 trading sessions and therefore warrants for a cautious approach going ahead
  • The higher bottom formed at last week’s low of 5798 is a key intermediate support area. The index is seen hovering around this support region in the last four sessions
  • Weakness and close below last week’s low of 5798 will indicate a short term top in place at the recent high of 6142 and accentuate declines towards 5500 in the short-term being the 61.8% Fibonacci retracement of the entire up move from 5119 to 6142 levels
  • In this week the familial markets would be looking out for Eight Infrastructure Industries index for month of August
  • The important data releases in the US markets would be unemployment rate, labor force participation rate, payroll data, factory orders, MBA mortgage applications, initial jobless claims and continuing claims. From Europe, CPI data, PMI data and the retail sales data would be important data points
  • From China, the important economic data release is the PMI data: Manufacturing & Service.

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