Rupee could fall to 85 and Nifty to 14,200 after the pull-back rally: Elliott-Wave analyst Rohit Srivastava
The recent rally, which started in mid June and which could send Nifty all the way up to 16,600-17,000, does not mean that we are out of the bear market.
The market has been on a clear downward trajectory for three months now. In the second half of June, the indices climbed gradually. In an interview with Moneycontrol, Indiacharts founder, market strategist and Elliott Wave expert Rohit Srivastava explains how to interpret this movement for the short term and the medium term. Elliot Waves are patterns in financial market movements used by technical analysts to analyse and determine price trends.
Srivastava, who has more than 30 years of experience tracking markets, was introduced to Elliot Wave analysis in 1999. For more than two decades since, he has been using this technical tool along with fundamental and balance sheet research. In 2019, he quit his job as the head of research at Sharekhan by BNP Paribas and started out on his own.
Indiacharts was launched as a website in 2000, with newsletters sent to readers free of cost till 2013 and later for a fee. After Srivastava decided to pursue this full time in 2019, Indiacharts became a full-fledged business with its research and educational services including a mentorship programme.
What is the level to which you are seeing the Nifty falling to?
I will answer it in two parts, one is the short-term picture and the other is medium term. From April to June, we had seen a pretty prolonged decline. By the end of June, we were getting readings that show that the market had gotten pretty oversold, not just in terms of price value, but actually in terms of sentiment. The index futures position of FIIs (foreign institutional investors) had reached a short position of around 145,000 contracts at the end of June, which was the highest since the pandemic. Typically, when we get to a point where traders are that short, you do get a short covering technical rally in between. So, there is an indication of a potential short covering rally in the near term, therefore I don’t see an immediate downside. In the next one month, we could end up seeing a surprise rally, rebound in markets. Beyond that, we will be watching whether the market rolls over again and how far the upside can go. If you look at a 50% retracements of the entire fall, from the top of April around 18,150 to the bottom of 15,150-15,180, the level will be at around 16,660, and if it is 61% retracement, it would be closer to 17,000. So I'm sort of open to the idea that this rally stretches towards 16,600 to 17,000 on the upside in the coming month. If we don't get past those levels, then we would start anticipating the next move down, below where we really bottomed recently. Right now, I put the current worst-case scenario near the 2021 April low, which is close to 14,200.
