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A Comprehensive Nifty 50 Analysis

The last time we wrote about the Nifty 50 was June 13th, when the index was trading at 8110. In “Nifty 50 Aiming For The Top” we thought “the index is poised for new highs above 9119 in the long term”. Less than 4 months later, it currently trades near 8700, after reaching as high as 8969 in September. But he most important question is what is left of the bulls’ impressive run? In order to find the answer, we need to apply Elliott Wave analysis to Nifty 50’s charts, beginning with the biggest time-frame available. Let this analysis serve as an example of what our Premium Forecasts look like.
nifty 50-monthly-7-10-16
The monthly log chart allows us to see the whole development since July 1990. Over 26 years of price data reveals that Nifty 50 has been rising impulsively ever since. The guideline of alternation has also been taken into account with wave (II) being a sideways running flat correction, while wave (IV) is a sharp and swift drop. What is troubling is the fact that the index appears to be trading in the final stages of wave V of (V). According to the Wave Principle, every five-wave sequence is followed by a three-wave correction of the same degree, but in the opposite direction. Wave V of (V) is still supposed to exceed the top of wave III of (V), but this would be the worst possible moment to join the bulls, since the index would be expected to enter a totally new phase of the cycle – the bearish one. This claim is supported by the RSI as well, which shows the typical bearish divergence between waves (V) and (III). In other words, 9119 remains a target, but this time only in the short term. In the long run, the bears should reign. Now let’s examine wave (V)’s structure on a weekly chart.
nifty 50-weekly-7-10-16
The weekly chart shows Nifty 50’s progress since the low at 2253 almost eight years ago. Its impulsive structure can be easily confirmed. In fact, the sub-waves of waves I and III of (V) are also clearly visible. Besides, the whole uptrend since 2008 has been developing between the parallel lines of a corrective channel. Wave IV is a bit deeper than most fourth waves and retraces back to the 50% Fibonacci level of wave III. Nevertheless, it does not overlap with wave I, thus keeping the above-shown count valid. Which leads us to the same short-term conclusion as the monthly chart, namely, that wave V of (V) is now under construction. It is unlikely to be able to reach the upper line of the trend channel, but a new all-time high should still be expected soon. How soon? Let’s see if the 4-hour chart can help us find the answer.
nifty 50-4h-7-10-16
The 4-hour chart of Nifty 50 gives us the proper sight to investigate the wave structure of wave V of (V), in order to determine what is left of it. As it seems, not much. Wave (4) of V appears to have bottomed at 8555, which means it is wave (5)’s turn to take the Nifty 50 to the next level. 9200 is on the table, but traders and investors should proceed with great caution and be ready to get out of the bears’ way as soon as possible, in case of a reversal. 
In conclusion, a new all-time high should follow, but it probably will not be as impressive as most expect.



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