18.2.2009 0utlook

"Nifty is closed to the resistance level of 2980 which is drawn after joining the Lows of 20th November & 2nd December, failure to cross this level may initiate further decline in Nifty to the support levels of 2850 & 2750. In case if the interim budget is not up to the market expectations, there is a chance of Nifty losing 150-200 points in next couple of sessions".Nifty declined for 2nd consecutive day after down gap opening & touched the support zone of 2757 & mildly recovered from these levels to close at 2770 still 78 points below the previous close. Nifty has an old 'GAP' opening between 2690 to 2720 which is likely to be filled if Nifty moves/stays below 2750. However, many short term momentum indicators are giving indication of technical recovery in near term.
As far as, short term charts are concerned, Nifty perfectly tested the resistance of 2980 & collapsed after that. Incidentally, it has given bearish breakout from a "Rising Wedge" pattern target of which stands around 2700. Therefore, there are chances that Nifty will take support around 2750 or between 2690-2720. Since most of the key index stocks are extremely oversold, chances of technical recovery are bright. As for as bar reversal in Daily charts are concerned, stocks like Renuka, Hexaware, Hero Honda, Glenmark Pharma, HPCL,Dabur and MRPL have given "Upward Bar Reversal" while Centirion bank, Bata India and Prism Cement etc. have given "Downward Bar Reversal". Stocks like MRO-TEK, Tulsi Extrusions, Hexaware, Opto Circuit, Bharat Forge and IRB Infra have shown spurt during the day with unusually high volumes.Sector wise, most of the banking, infra, chemical, fertilizer, pharma, IT, metal, steel stocks were among the top losers of the day while very limited stocks closed in positive territory. As far as A/D data is concerned it was in favor of bears in the ratio of 4:1 with 943 declines & 243 advances during the day.
In nutshell, there are unconfirmed indications that Nifty can go to 2200-2250, however there are no. of important supports in between & unless Nifty breaches these supports it may not be wise to draw any conclusion. Nifty has strong support in the region of 2690-2720 & if this support is held, Nifty can bounce back to 2790-2840. The best strategy should to concentrate on oversold banking & index based stocks to make use of the technical recovery in coming days.