Nifty : Reaching for the Top

Last few posts about the expected weakness in Nifty after a bounce has been proved a false alarm, which has led me to change my wave count. The new count which I am presenting below has come into existence because of the recent price action which has led Indian Markets to near its January highs, and the way things are going we are more likely to make a new high sooner than later.

In short term we are a lot overextended and that is the main reason we cannot see Nifty having a runaway rally, which can force investors and traders a to buy in a panicking fashion. I feel we should see a sharp correction pretty soon which can take us between 5050 and 5100. This correction will not only cool things down it will give the new money a better opportunity to buy stocks, and should take Nifty to new highs of this rally.

The chart above shows the new wave count and also a potential cup and handle formation if we correct from current levels. The count that is specified gives us a target of 5630 for the final 5th wave. But if we deal with only the 5th wave shown, we can expect the 4th wave of this 5th wave to end between 5050 to 5100 and 5th wave to reach a maximum of around 5520.

In summary the current wave count gives us a TOP in the Nifty at 5500-5600 in the most optimistic case. As for pessimists, in case this becomes a failed 5th wave, we have already seen the top in January!