22.1.2009 Outlook

y "Nifty, which was slightly overbought for targets of 2785, achieved its targets & bounced back to cover part of the opening gap of Tuesday. Nifty is currently placed between 2 important levels of 2700 & 2870, breakout on either side will have important implications of 100 points in coming days. " Nifty opened with a huge downward gap again despite the fact that Obama took over as US President & most of the investors throughout the world were expecting recovery in stock markets. US market had crashed badily on 20th & Asian & European markets also followed there fate. Nifty did recover to 2788 during the course of the day but declined sharply after 2pm to touch an intraday low of 2690 before closing at 2706, about 92 points below the previous close.

As far as, EST charts are concerned, Nifty has moved below the previous low confirming another lower top & lower bottom in the intermediate term & another close below 2700 may target 2550-2450 in coming days. On the bullish side, Nifty can bounce back from these levels to touch 2760 in next couple of sessions. Most of the index heavy weight stocks like Reliance, Rel. Capital, ICICI Bank, HDFC Bank, Tata Steel, Satyam, Infosys are giving indications of further decline after the technical recovery.

Select stocks like Allahabd Bank, cummins, HCL Tech, Indian Infioline, Indian Bank etc gave bullish "Upward Bar reversal" in daily charts while stocks like JP Asso, JP Hydro, Ranbaxy, Essar Oil, ONGC, Kotak Adlab Films gave "Downward Bar Reversal" in daily Charts.

Sector wise, most of the power, metal, sugar, banking, media, construction, steel stocks declined sharply by 5%-20% whereas select stocks like Satyam, HCL Tech., Crompton, Mc Dowell & select few stocks managed to close in positive territory. As far as A/D data is concerned it was in favor of bears in the ratio of 3:1 with 906 declines & 284 advances during the day.

In nutshell, Nifty has given another bearish breakout by moving below 2700, however it requires another close to confirm the bearish targets of 2500 & below & in the meanwhile select stocks which are extremely oversold are capable of lifting Nifty to 2750-2760 in couple of sessions. The best strategy should be to use the anticipated technical recovery for short term profit booking only in the stocks which have given bearish breakout in hourly/daily charts.