24.2.2009 outlook

Markets closed the week on a bearish note after most of the indices gave more than what it had gained in anticipation of a Industry Friendly Interim Budget which was presented in parliament on 16th Feb 2009. As the budget was below market expectation , we had expected Nifty to shelve 150-200 points. While market honored our anticipation and both Nifty and Sensex lost 211 (7.19%) and 791 (8.22%) respectively. Bank Nifty was the major sufferer which lost nearly 13.83% (631 Points) since lot was expected for interest rates etc. The Market breadth was extremely bearish in the ratio of 9:1 with only 25 Gainers and 225 Losers out of the 250 High Turnover Stocks of NSE.
The Medium and Long Term trend of Sensex and Nifty continues to be down. 20 Days DMA for Nifty is 2829.03 and 200 Days DMA stands at 3564.35. In Extreme Short Term, Nifty has turned DOWN again after it gave bearish breakout from a "Triangle" pattern having support at 2750-2755. Nifty is likely to cover Gap between 2680-2710 it had left few weeks ago. As far as, short term charts are concerned, Nifty has bounced back from the gap of 2680-2720 & now it has resistance around 2800-2875. On the other hand, if the support of 2661 is violated decisively, We can expect further decline of 300-400 points in coming weeks. On the bullish side, 2 close above 2890 may negate the bearish outlook of the market.As for as bar reversal in weekly charts are concerned, stocks like ITC, Tech Mahindra, Ganesh housing, Matrix, Indowind, India Foil have given "Upward Bar Reversal" while Edocomp, DLF, Satyam, HDIL, NTPC, RPL, IVRCL, M&M, Tata Tea etc. have given "Downward Bar Reversal". Stocks like Varun Ind, MRO Tek, Tech Mahindra, Ganesh Housing, Bajaj Auto and Clariant have shown spurt during the week with unusually high volumes.In nutshell, Nifty gave bearish breakout from the support of 2750 & declined to touch an intra day low of 2709 before bouncing back to close at 2736 still short of 20-30 points of the target which may be achieved soon. On the bullish side, Nifty can touch 2775 & 2875 in coming days. Since most of the banking, infrastructure, IT, sugar, steel stocks are extremely oversold. Technical recovery looks eminent. But at the same time Short to Medium Term Investors must have a very cautious approach since Weekly A/D Data is extremely negative which can be instrumental in further fall of 300-400 points of nifty in next few weeks if important supports are vioalted. The best strategy should to be buy very selectively in banking & infrastructure stocks which are due for rise in coming week.