>EAGLE EYE ON 28/07/09 (SHAREKHAN)

Pull-back on the cards

Markets on July 27, 2009: Horizontal day

After a good start, the stock market remained sluggish and under pressure all along the day. Finally, the market ended flat with Nifty gaining 3 points, whereas the Sensex shedding 3 points. However small caps and mid caps had a good session with the BSE MIDCAP and BSE SMLCAP
ending 1.63% and 1.53% higher respectively. On the hourly chart, Nifty is forming head and shoulders (H&S) pattern at the top with neckline pegged at 4528. If Nifty falls below the neckline it will see a sharp fall. On the other hand, if the head (packed at 4597) of the head and shoulders pattern gets surpassed, the current rally will continue on account of pattern failure. However, the
chances of bears leading from here are quite strong for the reason that the momentum oscillator is forming a negative divergence with the price. The advance to decline ratio was suspended at 1.93:1 on the NSE.

The hourly KST has turned in favour of bears with negative crossover. Our short-term bias is down and we are revising down our short-term target to 4339 with the trend reversing at 4600. However our mid-term bias is still up for the target of 5000 with reversal nailed at 4200.

Baring oil & gas and automobile sectors, buying was witnessed in all other sectors with fast moving consumer goods stocks emerging as leaders. From the 30 stocks of the Sensex, Hindustan Unilever (up 6%), Tata Power (up 5%) and DLF (up 5%) led the pack of gainers, while Reliance
Industries (down 4%) and Hero Honda (down 3%) led the pack of losers.

To see full report: EAGLE EYE 280709