05.2.2009 Outlook

As already mentioned yesterday "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.." It was another volatile day in which Nifty opened with an upward gap touched an intra day high of 2842 but could not sustain the higher levels & came down trashing during mid session to touch an intra day low of 2780 before closing at 2800 in a lack luster market with limited volume. Although the global markets were in positive territory, Nifty could not sustain higher levels & closed at 2803, about 19 points above the previous close. As far as, EST charts are concerned, Nifty is locked in a pattern having support at 2750 & resistance at 2845, breakout on either side may give 100 points move on either side. Since most of the heavy weight index stocks are trading in a range, breakout on either side is possible which can take Nifty to 2680 or 2880.As far as Bar reversals in Daily Charts are concerned, DLF, Rel Comm, Cipla, Sun Pharma have given Upward Bar Reversal in Daily Charts while stocks like HDFC Bank, Infosys, REL Infra, RPL, TCS, Tata Power etc have given "Downward Bar Reversal" Sector wise, most of the metal, steel, select auto, select cement, oversold infra stocks recovered & managed to close in positive territory whereas stocks like Satyam, Spice Tele, Mc Dowell, Titan, Polaris, IVRCL Infra could not sustain the higher levels & closed with low to moderate gains. As far as A/D data is concerned it was in favor of bears in the ratio of 6:5 with 638 declines & 540 advances during the day. In nutshell, there is no change in the technical setup of Nifty or other indices. 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 focus on stocks which have given bullish or bearish patterns in extreme short term. However, large volumes may be avoided due to high volatility.