12.2.2009 Outlook

"Nifty has confirmed the bullish breakout from "Inverted Head & Shoulder" pattern setting a target of 3100+, there is a possibility of corrective decline to 2880-2840 which can be used for buying till interim budget is presented. All the positions must be well protected with SL as any negative news from budget can cause a sharp fall towards 2700 & below." Nifty opened with a gap of nearly 40 points (1.3%), though most of the World markets were down by nearly 3%. After a zigzag movement within a range of 30 points for nearly 2 hours, Nifty resumed its upward journey & closed almost at the highest level of the day i.e., 2925, about 8 points below the previous close. (The actual closing was 2937, about 3 points above the last close). The rally was in expectation of positive interim budget on 16th Feb.
As far as, EST charts are concerned, Nifty has taken perfect support at the earlier neckline resistance of 2880 (which had become the support level) & bounced back. If charts are any indication, this rally should continue till the levels of 3050-3100 are achieved. On the bearish side, close below 2800 will negate the bullish outlook in extreme short term.As far as Bar reversals in Daily Charts are concerned, ICICI Bank, Satyam, RCom, JP Associates, Bharti Airtel, SAIL have given Upward Bar Reversal in Daily Charts while stocks like Educomp, Ranbaxy, Sesa Goa, Dena Bank, PFC and Hind Motors etc have given "Downward Bar Reversal"
Sector wise, most of the infrastructure, fertilizer, brokerage, sugar, financials, cement, auto & refinery stocks were among the gainers during the day while select pharma, IT education, steel, metal, select IT, entertainment stocks were among the top losers of the day. As far as A/D data is concerned it was in favor of bulls in the ratio of 6:5 with 531 declines & 640 advances during the day.
In nutshell, Nifty has bounced back from the neckline support of "Inverted Head & Shoulder" pattern, targets of which are maintained at 3050-3100. Declines above the support level can be used for buying with SL with broad SL of 2800. Be reminded once again that all the positions must be well protected with SL as any negative news from budget can cause a sharp fall towards 2700 & below. . The best strategy should be to focus on stocks which have already given bullish breakout having higher targets like Suzlon, Renuka Sugar, Rolta, Bharti Airtel, LITL & Maruti etc.