06.2.2009 Outlook

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.." Despite most of the Asian markets opening in positive note, Indian markets did open in green but higher levels could not be maintained & Nifty drifted lower to touch the important support zone of 2750-2760 before bouncing back to 2790 & closing at 2780, about 23 points below the previous close. It was a lack luster day with Nifty declining at turtle's pace. Though thee were no specific gainers or losers but indecisiveness on part of the investors held Nifty in narrow range.
As far as, EST charts are concerned, Nifty has taken support at 2750 on expected lines & it is showing mildly bullish strength in intra day charts. However it is likely to face resistance at 2800-2840 where lot of profit booking can take place. In intra day charts it has made "Inverted Head & Shoulder" which will target 2820-2830. However, the bigger "Inverted Head & Shoulder" pattern which is having neckline resistance at 2880 will target 3050+ in case of confirmed bullish breakout.As far as Bar reversals in Daily Charts are concerned, Tata Tele, Suzlon, Seimens, Ranbaxy, ICICI Bank have given Upward Bar Reversal in Daily Charts while stocks like Bharti Airtel, ONGC, BOB, Hind Unilever etc have given "Downward Bar Reversal"
Sector wise, select metal, banking, IT, sugar, infrastructure stocks recovered lately to close in positive territory where as financials, auto, pharma, IT education, media, telecom sector stocks were weak during the day which had lack luster trading. As far as A/D data is concerned it was in favor of bears in the ratio of 15:8 with 752 declines & 418 advances during the day.
In nutshell, Nifty has bounced back from the support of 2750 & now it is making a small "Inverted Head & Shoulder" pattern having resistance at 2790, breakout from where will target 2830+. At the same time, Nifty is making a bigger "Inverted Head & Shoulder" pattern having neckline resistance at 2880, breakout from where will lift Nifty to 3050+ in coming weeks. On the bearish side, Nifty close below 2750 may negate the bullish outlook temporarily. The best strategy should be to focus on stocks which are highly oversold & ripe for technical recovery or the stocks which have given breakout from bullish patterns in hourly charts.