04.2.2009 Outlook

Nifty failed to cross the crucial resistance of 2880, while making a bearish "Double Top" pattern having support at 2775, violation of which can target 2680. But in the meanwhile, Nifty is extremely oversold in hourly charts & technical recovery to 2798-2822 not ruled out where a lot of profit booking is likely to take place." It was a highly volatile day in Indian stock market which opened on a positive note with Nifty at 2805 further moving up to 2813 & crashing down to touch an intra day low of 2752, bouncing back again by more than 80 points to touch an intra day high of 2831 but again crashing back by 75 points to touch 2765 & finally closing at 2785, about 19 points above the previous close.
As far as, EST charts are concerned, Nifty is open to target of 2680-2720, however close above 2880 may negate the short term bearish outlook for the time being. Nifty had made a "Double Top" pattern with tops at 2881 & declined, however today it made "Double Bottom" pattern at 2760 & bounced back without achieving the targets. Technically, Nifty should decline to 2680 or below before bouncing back. However, sharp rally above 2880 is also not ruled out. Many important stocks are giving mix indications which can create a lot of volatility.As far as Bar reversals in Daily Charts are concerned, Sensex, Nifty, Reliance, REL, Infosys, JP Asso, Tata Power have given Upward Bar Reversal in Daily Charts while stocks like GAIL, IVRCL, Allahabad Bank etc have given "Downward Bar Reversal"
Sector wise, most of the midcap IT stocks, cement, sugar, IT education, media, auto, banking stocks closed in positive territory while infrastructure, select auto, metal, steel, chemical & power stocks closed in negative territory in an otherwise volatile day. As far as A/D data is concerned it was in favor of bears in the ratio of 7:5 with 688 declines & 481 advances during the day.
In nutshell, Nifty has made 2 different patterns i.e one bullish & other bearish. The bearish targets are maintained at 2680 while the resistance level of bullish pattern is 2800, breakout from where Nifty can touch 2880 in couple of sessions. So, Nifty can swing between 2680 & 2880 in next couple of sessions. Breakout on either side will have implication of nearly 150 points of Nifty. The best strategy should be to concentrate on stocks with bullish or bearish breakouts & take position accordingly. In any case traders are advised to trade lightly in view of the expected high volatility.