Monday, October 14, 2013

Nifty back to congestation zone 6182-6232.Will Inverse H&S pattern trigger 400 points rally?

Nifty Update : Nifty is getting closer to congestion zone 6182-6232.Nifty has reacted sharply on downside around this congestion zone.It happened in Jan 2013,May2013 , july 2013 & Sep2013.However,we believe that time around,market may give surprise move on upside.The triggers for current rally are 1) Course correction by RBI,some of retrograde steps that were taken in August were reversed 2) recovery in rupee & 3) delay in tapering.On sep 5th,we said that Rupee has made double top around 68.50/68.70 & recovery in rupee will trigger rally in nifty.Though Indian macro data are not yet comfortable,market is factoring 3 things a) US will resolve debt crisis b)Tapering may be postponed to 2014 or tapering may be lighter & c) Year end Global liquidity rally. On daily & weekly Charts,Nifty is making bullish Inverse H &S pattern & should Nifty close above 6182-6232 for 2 consecutive days + Weekly close,we may see new high in the market.This breakout may also take hue of pre election rally and should Fed delay taper in 2014,Nifty will surprise traders on upside,the probable targets would then be 6660-6730.As articulated in our earlier posts we are of the view that as long as Nifty holds on to 5744/5585, this market is buy on dips and Inverse H&S pattern will play out in due course.For now, Support levels are 6063/5944 & Resistance levels 6182/6232.

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