As already mentioned yesterday "Nifty has broken some important supports around 2800 setting further bearish targets of 2500 in coming weeks but at the same time it is extremely oversold while moving in a "Declining Wedge" pattern which is normally bullish. Move & close above 2785 will further intensify the recovery process." Nifty remained range bound throughout the day when it traded between 2720 & 2802 throughout the day except after 2:30pm when Rolta crashed heavily from 100 to 32 in no time. However, towards the close Nifty recovered handsomely to touch 2762 before closing at 2744, about 28 points below the previous close, thus wiping off intra day's losses. Nifty along with many index based stocks is already in oversold zones & any positive news can trigger technical recovery to 2810 & 2910 in next few days.
As far as, EST charts are concerned, Nifty is trading in a bullish "Declining Wedge" pattern & it needs only a positive trigger to come out of this pattern for the said targets. On the other hand, Nifty close below 2700 may pave path for Nifty to touch 2500 in next couple of weeks. Since most of the stocks are already oversold, chances of technical recovery are very high.
Sector wise, most of the stocks like Rolta, Satyam, Siemens, Zee Ent., R Comm., Rel. Capital, Yes Bank, Suzlon energy were among the top losers of the day & select IT, pharma, oil, cement, metal, auto stocks were in limelight to close in positive zone. As far as A/D data is concerned it was in favor of bears in the ratio of 2:1 with 779 declines & 401 advances during the day.
In nutshell, Nifty is in a narrow "Declining Wedge" pattern which is normally a bullish sign with resistance at 2777, breakout from where will give minimum 65-70 points of Nifty & in the process Nifty will give another bullish breakout which can take Nifty to 2910-2920 in coming sessions. On the bearish side, any decisive close below 2700 can wipe off more than 100 points of Nifty in 1-2 sessions. The best strategy should be to continue to concentrate on oversold stocks which are ripe for technical recovery & avoid positional shorts for next 3-5 trading sessions.
Read my outlook it was so useful
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