Nifty Technical Outlook: Reshuffling Of Funds May Help Investors

The bellwether index is about to encounter stiff resistance, and three very clear technical signs emerged last week to attest to the fact. First, the formation of an inverted hammer candlestick in an uptrend, which indicates that the bears are gradually wresting control away from the bulls. Second, the pushback that the index got last week the moment it neared the upper Bollinger Band on the weekly chart. And third, the stochastic momentum oscillator, that's now clearly in the overbought (80% plus) zone and looking ripe for a bearish crossover.

Traders who missed the 8% upswing that took place over the past couple of months should be careful not to jump in with both feet after the ship has sailed, proverbially speaking!

Those looking to book profits in their portfolio and move a portion of their moneys into debt funds for the next year or so ahead of the elections, may do so now. Positional traders with 6-8-week view may begin building positional shorts on the index at these valuations. At the very least, a 300 odd point correction is due - and if the flat shape of the channels is to be believed, we may very well see the index meandering down to the 10,000 - 10,250 mark once again, over the next couple of months.