Alpha India EE – Reviewing the short side

Our preferred minor view on the Indian market remains negative. We are looking at the current leg up as a second wave correction which should complete soon (near 6,050-6,100 levels in the case of NIFTY). The alternate view suggests a completed (a)-(b)-(c) corrective structure down and now a potential new impulse up. Above 6,100 levels our alternate positive view strengthens.
The updated Numeric Ranking continues to suggest Punj Lloyd, Suzlon, Housing Development and Infrastructure and Tech Mahindra as worst performers which are most likely to outperform over the next weeks. On the upper side, we have Federal Bank, Canara Bank, Bajaj Auto, Bank of Baroda and Cummins as top performers and potential underperformers in the weeks ahead.
A second corrective wave up is a time of alertness and caution in the case of the short side of the portfolio. The Rieki portfolio currently carries 5 shorts. Cummins is retesting previous highs at 810 levels while Rieki made a potential head and shoulders formation which looks ready to break the neckline. Both weekly and daily RSI look negative, while 60MIN RSI is over reactive and suggests a turn from here. However, a break above previous highs would negate our negative view. Tata Motors is also retesting previous highs at 1,350. Weekly RSI and Rieki are still positive, suggesting that another leg up could happen before anything. Bank of Baroda, Federal Bank and Bajaj Auto structures look like completing second corrective waves up. Key levels to watch lie at 990 for Bank of Baroda, 470 for Federal Bank and 1,620 for Bajaj Auto. A break above respective resistances would suggest further positivity and potential new highs.
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Coverage India: BSE500 traded stocks and Indian Indices.
Michesan Anna-Maria, the columnist for the WAVES.INDIA weekly and Head of India Research. Anna discovered her interest of markets immediately after completing her graduate studies in Economics. She followed it up with post graduate studies in corporate finance. A host of research work in behavioral finance, option strategies and quantifying market sentiment followed. Anna covers Indian equity and combines Elliott, Time Fractals and Time Analytics to deliver accuracy across time frames. To review some of her work, check out the annual India accuracy report 2009.