Nifty has found support at 8000 levels and has bounced
back to 9400 levels. If we look at the daily chart, the entire rise in nifty is
in the form of a wedge. The resistance for this pattern in Nifty lies at 9500 to
9600 level. If Nifty breaks below 9000 levels then we will see the second round of
market correction which will take the market much below the recent lows of 7600.
If we look at the quarterly chart of Nifty, we can
see that Nifty took support at the lower end of the channel which was at 8500.
If we break below 8500 the target for a parallel channel is in the range of 5500.
Nifty has an EPS of around 450 RS and it is still trading at a P/E Of 20X. Historically
markets have bottomed out at P/E of 12X which again gives us a target of 5500 on
Nifty.
Summary:
1) Nifty is forming a rising wedge pattern in daily charts. Any breakdown below 9000 signifies a deep cut in Nifty
2) The nifty quarterly chart has found a support at 8500 levels, Any break below 8500 will cause the market to correct sharply
3) Nifty is still trading at P/E multiple of 20X, while historically the bottoms have occurred at around 12X which gives us a target of 5500 levels.
