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NIFTY is behaving like a moody lover who is inclined to surprise you with her passion as well as her cold vibes in equal measure. So one has to bear her the way she is making her moves and bet our money as cautiously as a Chinese rice seller.

To begin with, there are no great stimulants or cues for the NIFTY to follow (on either side) and since most data (including US job data) has already been dicounted, there is hardly anything to act as a trigger, so mostly NIFTY would act on global cues & react to the news of the day. So am not going to spend a lot of time on the fundamental analysis part & state the obvious about how the valuations have gone awry n blah blah blah.... Lets quickly come to the technical part of it;

NIFTY has been rangebound & i did see a double bottom pattern last week, but what has been increasingly evident has been the ascending triangle & now we are in a crucial phase of the life of that triangle, because prices will have to break-out one way or the other this week. I had earlier also pointed out that around September 10th would be the crucial break out.... So prices will have to go beyond 4740 levels decisively in order to break the upper line of the ascending triangle to mark a new bull market for at least a few coming weeks. There is however one problem with this theory, that being the crucial resistance level for NIFTY around 4780 levels which is further enhanced by oscillators suggesting that NIFTY might come down again from 4780 levels (at least for a short time) before rising up & that would provide an ideal buying opportunity

One thing is undeniable from the chartists perspective & that is the classic ascending triangle & if prices dont break-out on the upper side this week, I would be a worried man for sure ... This is the most crucial week as far as I am concerned (unless NIFTY stays flat throughout the week).

Here is the chart pattern I am talking about

Also the fact that rangebound trading in the last few days (&weeks) has been a low volume game makes it a classical case of an ascending triangle in its last phase. As YK has been pointing out for the last few days, there are some big fat men with deep pockets out there who are hell bent on laying a trap for us and we therefore need to be cautious.

But am cautiously optimistic that the prices will break out of that 4750 levels & head upwards, at least everything in the NIFTY chart suggests that. There might even be a up gap trade on monday. What made me even more optimistic is friday's trading... I had pointed out on thursday evening that Friday will have to move into green because every scrip was pointing greenward moment. On fridays intraday tick chart it was quite obvious by 12:30 that it was a very very low volume game and the listless markets (4640 was the neckline, mind u) will have to make a big move in one way or the other and eventually thats what happend suggesting even more strongly that NIFT is in for a break out on Monday (or the coming week by any means)

P.S: Asahai am sorry about not posting over the weekend, but better late than never

FIIs were net sellers to the tune of 450 crores last week & from whatever little am hearing about FII mood this week, they are planning to pump in more money this week (source, reuters & yahoo RSS feeds)

There could be some profit booking @ 4780 levels (if we reach there) and that is a significant resistance level (at least thats what most brokerages are agreeing with).

NIFTY has finally broken out of the quagmire, the ascending triangle is broken at the upper channel line and we are finally in the BULL markets! Remember that ascending triangle is generally a continuation pattern and thus we must see the markets rising above from now on. NIFTY has also broken 4780 and leaves no scope for any doubt about this breakout (as I had pointed out earlier that 4780 is the near resistance after 4750). Now, if NIFTY closes above 4750 levels for the next 2 days, then that would give us absolute confirmation. As of now the only worrying factor for me is not so high volumes (only a secondry indicator). The other worrying factor is many bluechips havent yet fully participated (Reliance pack mainly) and there are no near term triggers for these, plus the fact that valuations have been on the higher side for many NIFTY scrips already. But there is another very good India centric reason for the markets in general and that is the monsoon correction which has revived agricultaral interest (as on cue many fertilizer & agri stocks have risen splendidndly today) 52 week high for both NIFTY & SENSEX! Thats very good news indeed

Here is the chart again