The political drama has ended in the worst possible manner. The President dissolved the Lok Sabha on the 26th of April, 1999. The impending political uncertainty and the fear of stagnation in the economy made the sensex crash by 160 points on that day. A look at the broader counts is warranted at this stage.

a) The fall from the high of 3817.94 (15-03-99) is certainly corrective in nature as is evident from the formations in the minor and sub-minor waves. It is likely that the move from 2741.70 to 3817.94 was a non-impulsive five wave formation. The fall from 3817.94 is a correction of this entire move. 53.79% retracement of the rise from 2741.70 was completed when the sensex touched the low of 3239 on 26-04-99. If the current slide stops short of 3153, a rise to at least 3820 can be expected shortly. However, if the sensex falls below 3153, the correction can extend to anywhere between 3153 and 2700. Since this correction is the B wave of the corrective pattern that started at 2741.70, the C wave to come will provide exit opportunity to all those who are still long.

b) The second count that we were considering was that the second minor wave of the third wave of the five wave sequence from 2741.70 is currently on. This count will be negated if the sensex falls below 3215.

c) The last count was that a zigzag pattern was completed between 2741.70 and 3817.94 and a fresh impulse wave downward is currently on. This count is weak due to the corrective nature of the waves unfolding from 3817.94.

A positive opening on Wednesday will give an initial target of 3319 to the sensex. The next target for the sensex will be at 3351. If the sensex turns down before breaching the 3375 mark, it may be headed for Monday’s low of 3240 once more. It is possible that the sensex fluctuates

in the lower range i.e. between 3180 and 3350 over the next two days as the five wave movement from 3516 completes itself.

A hesitant opening on Wednesday may make the sensex rally by about 40 points and then turn down again to 3172. The 3150 level would also give strong support to the slide in the sensex.

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