Nifty

Summary

Published 17th May 2018 & validated 16th July 2018

Odds favor another all-time high. The target depends on the exact correction pattern that leads into the final swing before Indian stocks enter into a cyclical correction. It will most likely exceed 11,500 points.

Market Pulse

Published 16th July 2018 

Price action during the past few days of trading did not result in additional conclusions to our July 12th update. Therefore, the analysis further below remains fully valid.

Published 12th July 2018

Indian stocks are currently among the strongest equity markets worldwide. The black scenario is our base case whereas the red scenario is our best alternative.

We expect the Nifty to work its way straight on to the upside. This means that it should trace out a 3rd wave to the upside at this stage. It should be strong and not allow sizeable corrections. This is more or less defined by about 3% in the Nifty. Moreover, the green trend channel should hold comfortably. If all of that is not happening, it is probably not the 3rd wave yet! Odds shift towards the red scenario in that case.

An unfinished double-three correction could swing us up as part of an (x) wave right now. This is depicted by the red scenario, which carries slightly lower odds than the black scenario. Alternatively, we may also see an ending diagonal going into the top, which is not depicted in our charts. Both this scenarios require a fade and reversal very soon. Moreover, both will retrace probably much more than 3% and violate the green trend channel notably.
All in all, we are short-term bullish on the Nifty 50 until proven differently.

Short-Term Elliott Wave Analysis

Published 21st May 2018

The latest advance after touching the green trend channel support shows a 3-wave move in the same direction as the paramount trend (highlighted in pink). A subsequent drop below 10,600 points leaves only two possible scenarios short-term. Either the green trend channel is a double zig-zag or an impulse with a subsequent irregular flat correction into minuette wave (ii).

We see slightly higher odds for a sideways double-three correction since the late January 2018 peak. We expect a sideways pattern due to alternation guidelines. This could be done by a flat pattern that ends the fourth wave. It is depicted in the red scenario.

The alternative scenario remains an impulse. It just gets corrected by an irregular flat with an unusually big b-wave. Such big b-waves are usually followed by sharp c-waves. That would most likely take the Nifty into the 10,4xx area.

All in all, we remain optimistic to see another all-time high. The upside target for the year 2018 remains at least within the 11,500-11,700 points band.

Medium Term Elliott Wave Analysis

Published 17th January 2018 & amended mid-April (charts only)

The BRIC story seems to be confirmed from our Nifty technical analysis point of view. The Nifty 50 swiftly made up for its losses during the worldwide financial crisis in 2008. We label this action as minor wave 1, which ended in 2010.

Thereafter the Nifty Elliott wave pattern shows a flatter rise in minor waves 3 and 5. The flatter rise does also translate into less progress within waves 3 and 5. Waves 1 is longer than wave 3. Therefore our expectations are smaller gains within minor wave 5 than within minor wave 3. Last but not least, it is noteworthy that momentum has been decreasing over the past couple of years relative to wave 3. This indeed suggests that we are currently in the fifth wave of minor degree.

The best alternative to the scenario above is a situation that puts the Nifty in the third wave of intermediate degree. This is still possible but we need to see the trend channels taken out on increasing momentum.

Technical Analysis