One just need to keep these figures in the mind and till these levels are not crossed on downward side; the bullish trend prevails Support exists at 6000, 5822, 5500 and resistance exists at 6223.
Following indicators show that peak is achieved in Nifty
(a) MACD (Moving Average Convergence Divergence) which plots the difference between a shorter-term (12-bar) and a longer-term (26-bar) exponential moving average (EMA) shows that the Nifty probably has reached peak unless it moves past 6223 level with volumes. The market is heading for 6100 with a minor support at 6130/6135 (monthly support line). Crucial support exists at 6079 and break of it on a closing basis will be negative for the market on a short term perspective.
(b) RSI is overbought, which indicates a potential short-term reaction down.
Why Long Term Trend of Nifty is Bullish?
- One need not panic as long term trend is bullish as now market is going to get into Narendra Modi wave and if any single party comes to power in May 2014; we will see Nifty touching 6900, 7500 levels. However only concern is that US Federal Reserve will taper its $85 billion bond-buying programme in May 2014 while India goes into elections. If that happens, then the market will be adversely affected as we would see foreign institutional investors moving away from the market back to the mother market. FIIs have been the primary source of foreign fund inflows in the domestic market. Thus we need to keep watch on US tapering policy and if no tapering occurs then Nifty heads for 6900 in its first leg up move.
- Govt spending increases before general elections and rural gets the massive lift before May 2014. Higher spending means more business for companies.
- Global rating agency Standard & Poor’s (S&P) today said it will review India’s sovereign rating after the general election and its action will depend on the policy announcement. It means that also want to see the formation of govt i.e. whether it is a single party or a coalition govt. Even Goldman Sachs has upgraded Indian market's investment ratings from underweight to market-weight.
- Nifty is in a rising trend, and in short term Nifty is now testing the ceiling of the trend channel. This may give a reaction down on the shorter time frame, while a continued rise within the trend channel may be expected for the longer term.