So after spending the first half of July '14 in a corrective mode, Nifty started marching upwards and scaled a new intra-day high as well as closing high in the second half. I have been reiterating over the last couple of months that this market keeps on giving opportunities to buy and 7800 levels are to be attained. While it is premature to call for a top, now IMHO we are slowly approaching the top end of this rally. Logical targets for the rally were around 7200-7500 and euphoria took the markets much higher. Technicals and ratio analysis suggest that the top for this rally if not achieved already should come around 7900-8000 levels.
I would again like to draw the reader's attention to the point that I am not talking about a correction setting in immediately. All that I am saying is that now we need to be careful about the longer term investments in major stocks as we are approaching a top. Now it is time to slowly book out profits and deploy those funds in FMPs, FDs and if the profit chunks are large, in assets like real estate. The next set of buying opportunities will come later this year or next year and the same will be intimated through the updates.
For BankNifty, if it takes out the swing high of 15700 levels of May '14, then it can rally a further 800 odd points towards 16500 levels. The crucial support remains at 14200 levels breach of which will invite a further correction of 800 odd points.
One need not read too much into the stock split of Axis Bank [1:5] It is another sign of distribution. Initially prices may get marked up towards 420-425 levels and then correct downwards to 300 odd levels. Again, no need to rush to build shorts. The same will be confirmed by price and volume action and I will update the same via Twitter.
So for August, the broad Nifty range is expected to be 7400-8000 levels and high volatility in price action expected. On BankNifty broad range can be expected to be 14200-15700 and breach of either of these barriers will bring a large swing trade in the same direction.
Crude in dollar terms will move in the 95-105 dollars / barrel mark whilst MCX Crude will likely move in the 5900-6400 range for August '14. Falls are buying opportunities.
To summarize, book profits but resist creating shorts till 7400 is not taken out on downside.