Technical Perspective: Nifty
The double top formation on Nifty chart sent some tremor in pshychology of market players in the beggining of December 2010. There was no clue left, when market forms a double top after just more than 1 years of its supposed bull run. It was drastic, if formed on third year. Sharp Price erosion in midcap and small cap stocks raised doubt more among both investors and traders. How fragile the sentiment of players - be they FIIs or HNIs or Retail investors or PE fund managers. It reminded at least in one of scenarioes of 2008 of fund deployment. Very sure, market players do not want to visit that phase so quickly. They have just now heaved sighs of relief. Comments from best minds of world raises hope like "The economy is gaining momentum and there is a tangible shift in outlook. For the first time in years, people are feeling more secure and more optimistic about their finances. They are ready to get back into the wealth–building game...." — Steve Forbes.
Wedging formation was the initial indication that nifty will trend higher and the sentiment has not exactly blurred, which again getting confirmation after formation of a double bottom or inverted double top, suggesting upmove in near future and leaves a strategy "Buy on Dips". However, on technical basis, crossing nifty level of 6100 with a good volume will bring the momentum of upmove. At present, the F & O data do not suggest that smooth sailing of Nifty around the level of 6100. Thus the range is very much in tact with a movement of 400 points on intermediatary basis. For long term, market players are very confident that any upcoming crisis will be tackeled smoothly by politicians, intellectuals and economists around the world; as the last bear rally lasted much shorter duration.
Lets hope, India continues to be an attractive market.