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NIFTY Analysis for the week of May 30th-Jun 3rd 2016 -- 100% Accuracy
 

Posted by admin on

June 1, 2016

The below newsletter was written on May 31st noon IST.

NIFTY had a big rally in the last 3 days of last week (May 25th-27th). As of this newsletter on May 31st at around 2:37pm NIFTY is around 8165.

Last week was also options expiry week & people who traded in options made a killing/huge profits “if” they were on the bull side. Reasons given for the rally as per media – is strong economic report in USA of New home monthly sales for April & coincidence that Morgan Stanley upgraded Indian stock market to “overweight” on same day following USA strong economic report.  Markets are ignoring bad news & rallying on good news. This indicates Bulls are in control for now.

USA fed is considering to increase interest rates following strong economic indicators last week. Media & market noise “about interest rates hike in USA” has shot up big from last week.  Fed rate decision is due on June 15th 2016. All this will have an impact on Indian markets.

Back in India market is expecting 50 basis point “cut” from RBI on June 7th. A big market mover easily.

Volatility may shoot up in next 1-2 weeks as Bulls & Bears fight it out.

Following are the big economic reports due, which are most probably market movers for India in short term

May 31st 2016 (India) – India GDP Annual

June 1st (USA) – US ADP Employment change & US ISM Manufacturing PMI

June 3rd (USA) – US Balance of Trade ; US Unemployment data & US ISM Non-manufacturing data

June 6th (USA) – Fed Yellen speech

June 7th 2016 (India) – RBI Interest Rate Decision

June 10th(USA) – US Michigan consumer sentiment Preliminary

June 14th (USA) – US Retail sales MoM

June 15th (USA) – Fed interest rate decision

 

Since we at ‘vcarefinance’ are “trend followers based on Technical analysis”, below is our analysis of Nifty

SHORT Term TrendUP

MEDIUM Term TrendNEUTRAL (This week/next week will be critical as per our knowledge)

LONG Term TrendUP

 

BULLISH SCENARIO: Even after the big rally of last week, we will stay Neutral as per what Medium trend chart is indicating. Also Todays high of 8220 is critical for NIFTY to cross for any further rally in short term. Expect a big rally if 8220 is cleared convincingly. There is a strong resistance around 8250 area.

So, if Nifty crosses 8220-8230, 1st target 8250-8260 (resistance strength 9/10 to 10/10); 2nd target 8330-8370 (resistance strength 9/10 to 10/10); 3rd target 8400-8420 (resistance strength 9/10 to 10/10)

 

BEARISH SCENARIO: If NIFTY struggles to cross 8220 for whatever reasons this week, then it means Bulls will most probably lose momentum. Also big economic reports are due as indicated above

If Nifty stays below 8220, then 1st target around 8100-8090 (support strength 9/10); 2nd target around 8000-7990 (support strength 10/10) & 3rd target around 7950 (support strength 10/10)

 

CONCLUSION: This week, bears will most probably step in, to give fight to bulls. If 8220 is crossed “convincingly” expect a solid bull run this week or next week. Please keep an eye on major economic reports as mentioned above, as they could be market movers. Small pullback is already happening as I write this report. I expect the pullback that is happening currently, to be real test for bulls and bears for “this week”.

If I have to take a stance, I would say that this week could be a neutral week considering the RBI policy news due early next week. 

So, this week I expect pullback first (already happening) & then bullish scenario if bulls continue their rampage of last week.

 

God Bless!

Koomar

 

UPDATE — For the week as predicted, NIFTY first pulled back to around 8130 and then went up but could not clear 8260. Ended at 8220. Please refer above, I kept referring to 8220 as a critical level. Could not clear 8260 as there was lots of resistance as mentioned above.

Accuracy 100%.

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