Jan 2012 - Nifty Yearly Forecast - Market would bottom by May 2012
Dec 30, 2011 - Nifty closed today at 4624.30 which is about 1510.20 points (24.61%) down compared to last year close of 6134.50 on Dec 31, 2010. Nifty was trading between 4531.15 and 6,181.05 which is about a swing of 1650 points.
Last Year Analysis
Here is the Nifty Yearly Chart with its technical indicators. Nifty is down alomost 25% for year 2011 is not a surprise because of overheated market has to correct itself. RBI is increasing the interest rate to control the inflation is one main important factor. Housing Market is going to crash in India in the coming years. Home prices would not move up in the coming years, it might go down sharply. 25% of Nifty crash in 2011 confirming the upcoming Housing market correction.
2012 Year Forecast
As emerging markets became leading indicators in the recent past years, Nifty would reach short term bottom sooner compared to S&P 500, US Market. We may see Nifty bottom around 4000 before the second quarter of 2012 (May 2012). But Nifty has to go through wild swings in either directions before reaching the bottom.
From May 2012, Nifty might have a strong bull run towards 5200.00. If you are a long term investors, then it is a good idea to allocate your money gradually and consider taking long position on Nifty in the next quarter. Note that you may have to wait for about one year to see the significant return. So it is not a good idea to trade on Options and Margin. As soon as Nifty Starts moving below 4500, you can take long positions. You can go aggressive buying when Nifty is reaching or going below 4000. Nifty might go down 4000 to shake many investors psychologically, but it is very much unlikely it will stay for long below 4000. It would come up very fast, if it moves below 4000.
Plan for buying Nifty between 4000 - 4500 and plan to sell it around 5200 - 5600 in the long run. This strategy would not work out speculators and intra day traders. They can follow my weekly forecast.
FYI - If you are very much conservative long term investors, you can go long on Nifty and buy put options for next 6 months to protect your investments.
10 days EMA: 4698.96
21 days EMA: 4756.57
50 days EMA: 4872.15
200 days EMA: 5232.82
Next Resistance Levels:
Strong Resistence level at: 5232.82 - 200 days EMA
Strong Resistence level at: 4872.15 - 50 days EMA
Strong Resistence level at: 4756.57 - 21 days EMA
Next Support Levels:
Strong support level at 4718.00 set on Feb 05, 2010
Strong support level at 4639.10 set on Nov 24, 2011
Minor Support level at 4531.15 set on Dec 20, 2011
Strong support level at 4003.90 set on Jul 10, 2009
Strong support level at 2620.10 set on Mar 06, 2009 Will reach here with double dip
Strong support level at 2584.00 set on Oct 24, 2008 Will reach here with double dip
Posted on Dec 31, 2011