Nifty outlook

Is the worst over? thats a million dollar question! Atleast the 50-stock index has found a short term bottom at around 3800 levels. This level is significant because it is close to 62.8 % of 6287, the highest closing of Nifty. The ratio 61.8% is called the golden mean and the most important of all Fibonaci ratios with respect to retracements in the financial markets. For all the optimistic souls in the market, it is a good news that Nifty did nt breach this level on a closing basis. Shortly after Nifty bottomed out at this level, the much awaited bear market rally has started. The market saw olympic sized gains and bounced back to the current levels of 4500 in just two weeks.

It could be seen that Nifty had broken the down-trend line and headed towards reaching the 200-EMA which is currently around 4737. The rally may continue till Nifty reaches this crucial resistance and may lose steam at around 4750.