Saturday, August 22, 2009

Weekly Technical View by Tanmay G Purohit:
Nifty (4528) fell just 52 points week on week as for most of the week it remained in a very tight range between 4350 and 4500 but closed with strong gains on Friday. The rainfall for the country as a whole during this year’s monsoon has been 26% below the Long Period Average, down from 29% deficit last week, which means rains have improved this week, though not out of the woods fully. Nifty has tested 4350-4400 area on all days of this week but never broke through which has started a pullback rally. This week will be having derivative expiry for August and if Nifty crosses 4600 on closing basis, even bearish H&S will be negated which will give way to good amount of short covering. Nifty in that case may even touch near 4900-5000 levels in days to come. Caution advised if now Nifty breaks 4400. 

Supp 4475/4395/4255 Res 4620/4668/4790
Stocks looking positive - ABB, CAIRN, HCC, IVRCL INFRA, SINTEX, TATA COMM

Last Week Recap Of Technical View:
Nifty (4580) rose 2.2% this week. Nifty bounced back from 4359 which was trendline support in weekly graph and it didn't close below 4400. The pullback rally was propelled by changes in Direct Tax Code but the new code is open to public debate and still there is time in implementation. There can be some changes too in this time lag. Monsoon is still worrying market players with rainfall being 29% below normal in 1 June to 12 Aug 2009 period. The rain activity has been deficient or scanty in 27 sub-divisions out of total 36 which translates into 2/3rd of India having below normal rains. India's swine flu toll rose to 23 on Friday and 107 new cases were detected positive for the viral infection, taking the total number of those affected by influenza A (H1N1) virus to 1,390. IIP data has been very encouraging for India on the back of mining growth and Reliance KG basin gas and globally speaking Germany, France and Hongkong have come out of recession after they posted positive GDP figures this week. Long-term outlook is still very bullish for India but short-term can be a bit difficult to trade owing to stretched valuations after recent breathtaking rally. 

Nifty once crosses 4650 and closes comfortably above that, we can see  4900-5000 levels in days to come. Failure to move past 4650 will make a case for a bearish Head & Shoulders pattern (shown in daily graph below) which will break down below 4400. Short-term players can consider 4370-4400 area as important support but below that caution is advised as Nifty may try to touch 4100 levels too.

Supp 4450/4365/4235 Res 4670/4789/4855
Stocks looking positive - FSL / TATACOMM / NDTV / SUNTV / GICHSG

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