Ashika Monthly Insight August 2016

STRONG ON CONSUMPTION
indicates that after every 8 year markets witness a major
correction which is in the range of 20-60% The theory can
be aptly applied in Indian markets as well as we witnessed
a hefty correction in the year 1992 followed by a major
correction in the year 2000, then in the year 2008 and
now the year 2016 is the next in the eight year cycle.
Calculation:
Projected Price- Current Market price = 8800-8600 = 200
Now, time required to complete the target = 200/2 = 100=
3.33~4 months.
Indian VIX
Indian VIX signaled fall in volatility. A close observation
of the Indian VIX reveals that the Index is a mean
reverting one where it is now near to its historical level
of 15-16. On the technical parlance not much inference
can be drawn from the present setup and as the broader
trend continues to remain negative with its consecutive
lower low formation in daily chart. With a steady line up
of crucial event in the forthcoming month like that of the
monsoon session, policy meet by some global central
banks it can be expected that Volatility in the market
might increase in the forthcoming month which might not
augur well for Nifty as an inverse relation seems to exist
between each other.
Gann Theory of Time cycle
The rally since December 2011 onward if considered as
the beginning of an impulse wave then Nifty presently is
trading at its 5th wave. Previously impulse wave 1 took
17 months in the making. Hence forth if wave 5 unfolds
into an equidistance of wave 1 then the recent rally in
the market might extend further till the month of June
2018. Nifty now is trading within the 23.6 degree angle
of inclination, further rally has resulted in to form bullish
channel formation in weekly chart, target of which stands
around 8800, and according to W.D. Gann the said angle
signifies 2 unit of price & 1 unit of time. So the said
target of 8800 might be achieved within 3-4 months.
However the theory of the famous 8-year bear cycle need
to paid equal importance. This theory of 8-year bear cycle
Retracement principle
In order to identify crucial trend deciding level for the
market crucial movement in the market are being
identified which are as follows. The first being the entire
correction since January 2008 onward till November 2008,
the second being the gradual upscale for the Index since
December 2011 till the high registered in March 2015 and
the last being the corrective decline since March 2015 till
date. Retracement level from all the different time frames
conjoins around a singular point i.e. around 8000-8035.
Hence it can be concluded that Nifty on the downside the
conjoint area of 8000-8050 will work as a strong support
for market, sustaining above which markets are likely to
stay afloat with positive momentum. To further add the
correction since March 2015 onward has been paired and
now the crucial 80% retracement level comes around
8660 which indicates a change of trend for the
intermediate corrective decline.
Future Projection – August 2016
Post February 2016 correction if considered as leg ‘D’ of
Expanding Triangle’ then leg ‘D’ is now unfolding into
double combination correction. The 2nd corrective pattern
is exhibiting sighs of Diametric or Extracting Triangle
patterns and Nifty in order to confirm a ‘Running’ variation,
‘D’ should end below the top of ‘B’ i.e. below 8655. Hence
it can be concluded that Nifty need to surpass the July
2015 high in order to confirm its alternate pattern
according to Elliot wave principle. On the longer term
picture if the rally since March 2009 if considered as a
new impulse wave then presently Index is in the formation
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