nifty worst case scenario...

after the bail out package and indo-us nuclear deal is passed by the senate some analysts have been talking of bear mkt getting over and fresh bull run has started. but on technical charts the bearish scenario has'nt changed at all it still remains a bear mkt rally with sell on rise. the worst case scenario does'nt take into account short term rallies or bullishness. till we don't see any indications of a medium to long term uptrend developing on charts, we consider the bear phase to go on pricewise and timewise.

we will consider some techniques in case bear mkt goes on and hits lows.

nifty worst case tgts:

1)fibo:

taking 61.8% retracement of bull run 920 to 6357, the tgt according to fibo is 2997.

2)elliott wave:

after the impulse structure, "generally, a corrective wave will take the market to the area of the 4th wave of one lesser degree...especially when the corrective wave itself is a 4th wave. In other cases, the market will often find support at the top of wave 1 of one lesser degree." this sentence gives clue of the likely tgt of the ongoing correction.

the tgt according to this is either (somewhere between 3774 to 2595) or finally 2014.

3)p/e chart:

lowest ever mkt p/e was 10.84, accordingly the final lvl comes to 2522.


timewise correction:

as pointed out earlier it took slightly more than 5 years(from year 2003 to 2008-09) for the bull run to complete, so timewise atleast a period of 2 years from jan 2008 onwards is ideal for correction before next bull run starts. during the deep correction nifty will slide to lows and then consolidate. in sideways correction it may move up but will be resisted by the yearly trend channel.


abhay r somkuwar.