>EAGLE EYE ON 30/07/09 (SHAREKHAN)

20-HSMA violated

Markets on July 29, 2009: Dragon eclipses bulls

After a poor start the Indian indices saw a massive selloff in morning, as Asian markets especially that of China witnessed heavy selling. However, in afternoon it recovered a part of morning losses. Finally the Sensex ended 158 points lower, while Nifty was 50 points down at closing bell. Mid-caps and small-caps also closed lower with the BSE MICAP BSE SMLCAP closing 0.9% and 1.4% down respectively. On the daily chart, after today’s selloff we have a negative crossover in stochastic oscillator, which is not a good sign for the market. Further if the sell in stochastic is accompanied by the negative crossover in KST, the probability of the slide to deepen further may increase. On the hourly chart, the rising wedge finally saw a downside break down with 20-hourly simple moving average (20-HSMA) getting violated. Now the next support can be expected around 20-day simply moving average packed near 4350. Bears with 837 declines and 417 advances dominated the market breadth.

The hourly KST sank below the zero line. Our short-term bias is down for the target of 4339 with the reversal pegged at 4600. However our mid-term bias is still up for the target of 5000 with reversal nailed at 4200.

Selling was seen in realty, consumer durables, metal and fast moving consumer goods sectors. From the 30 stocks of Sensex, Tata Consultancy Services (up 4%) and Tata Power (up 3%) led the pack of gainers, while DLF (down 7%), Tata Steel (down 6%) and Sterlite Industries (down
6%) led the pack of losers.

To see full report: EAGLE EYE 300709