Indian indices—Sensed and Nifty--began the day on a flat note. For a few minutes, markets remained in the shade of previous swing highs. However, all the att 2empts to clear the previous swing highs went in vain and markets went down on a brisk note. Finally, Sensex closed lower by 329 points and Nifty closed 100 points lower. Mid-cap and small-cap indices too ended the day on a negative note. On daily candlestick chart, Sensex has formed a Black Opening Marubozu candle (a bearish candle with no upper shadow). Further, the Marubozu candle has fully engulfed the previous candle, thus forming a bearish engulfing pattern, which is not a good sign for bulls. On intra-day charts, indices have formed double top, whose target has not been achieved yet. Furthermore, on daily charts, Nifty has closed below 40-daily exponential moving average (40-DEMA). On down side support is expected at 20-daily simple moving average (20-DSMA). The gap between daily KST and the moving average has been reduced and is about to give a negative crossover. Market breadth was dominated by bears with 939 declines and 258 advances.

The hourly momentum indicator KST is still in a sell mode with negative divergence and is trading below the zero line. Both our short- and mid-term biases are down for the target of 2775 and 2450 respectively with the short-and mid-term reversals pegged at 2960 and 3111.

Broad-based selling was seen across all sectors with metal and realty stocks leading the pack of losers. From the 30 stocks of Sensex, only ITC (up 0.75%) was up. Jaiprakash Associates (down 8%), Reliance Infrastructure (down 6%) and ICICI Bank (down 6%) led the pack of losers.

(Disclaimer: The above chart shown is for study purpose only and not for trading decision)

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