Nifty is done with the intermediate target of 5850 and is expected to correct till 5630-5650 in the short term with a reversal above 5850-70 which is a crucial point to watch out for. It should be considered as a consolidation/ correction within the ongoing bull market and look for buying opportunities in this type of a market. I would still be betting on TATA steel which was an under performer in the current rally and the stock has a good potential to go up in the long run.If we have a look at the premium in nifty futures we could see a phenomenal rise and a premium of something like 35-40 could be seen as a topping out pattern in nifty. It reveals that there are only buyers in the market and to keep the balance of trade there should be some correction in the near term.The medium term target has been raised to 6150 with some consolidation and structurally the market looks good as lot of sectors are yet to participate in the upmove. Banking stocks are kind of overdone with the rally and i would expect the PSU banks to correct before any upmove. Stocks like Canara bank and Bank of India would be first among the list.Among other stocks Sesa goa is looking vulnerable below 171-170 zone and it is expected to correct till 160 with a reversal above 180.
As per the time cycle we have a 95-100 period cycle in Nifty which it is following since 2010 and October is cyclically not a great month for equity markets and we could see an interim low during this month before a substantial upmove. It is not a bearish view but a much needed consolidation before any valid upmove.
(See the attached chart for more details)
