The Bull rally that very few understand

Quasim Updated   
NSE:NIFTY   Nifty 50 Index
With the deadly second wave of Covid-19 and more and more states locking down the big cities, it is difficult to digest that the market is going to make new All-time highs and it would make more sense for the market to crash given the situation we are in. Having said that, we are indeed starting a new multi-month rally. Those who want to know the how and why about this rally must know about the new G-SAP 1.0 policy announced by RBI in their last meeting, it is basically a bond-buying commitment of the RBI. RBI announced that it will purchase G-Secs totaling Rs 1 lakh crore over FY2021-22. The word ‘unconditional’ here connotes that RBI has committed up front that it will buy G-Secs irrespective of the market sentiment. Sounds like QE to me. This keeps real interest rates negative and stimulates the economy. The flip side of it is that those saving in fixed income securities will eventually won't earn enough to beat inflation and will have move to equities.

Coming to the Elliot waves, the (3)wave that started in May isn't over yet. After almost a two-month long wave 4 of (3) consolidation, Nifty has broken out of the falling trendline in wave 5 of (3). This should be a multi-month wave like 1 and 3 of (3) have been with minor corrections in between.
In the Nifty 50 hourly charts here, wave 1 of 5 of (3) is going on right now and with (iv) of 1 going on right now (v) will start soon and can takes us 15150-15250.
Channel drawn from may'20 top to feb'20 top extends to above 17000 and I expect Nifty to be there by June.
May 3rd- So far, early in the day the Nifty has fallen in 3 waves. Now unless it transforms into an impulse we cannot say that we have a bear market trend in progress. The odds remain that an A-B-C correction retraced 78.6% of the rise and found support at the gap zone near 14421. Take it or leave it, do state elections matter beyond a one-day reaction? Study history. Covid is new and we are fighting between its impact v/s the impact of liquidity on financial markets.


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