>EAGLE EYE ON 06/10/09 (SHAREKHAN)

On a slippery wicket

Markets on Oct 05, 2009: Waning momentum

The domestic stock market opened in red on negative global cues and continued to face resistance on upside. It also failed to cross the high of the Doji candlestick pattern formed on Thursday. Nifty has been trading in an upward parallel channel with 4900 being a crucial support at the lower end of the channel and resistance at 5150 on the upper side of the channel. However, the weakening momentum is signaling that from here onwards the downtrend should ensue. So, 4900 on lower side should be watched for, as close below it will accentuate the selling pressure. Hence, we revise our short-term target to 4660 with reversal above 5150.

On the daily chart, Nifty is trading above its 20 daily moving average (DMA) and 40DMA at 4900 and 4773 respectively, which are crucial supports going forward. The momentum indicator (KST) has given negative crossover and is below the zero line. The market breadth was negative with 247 advances and 1,040 declines on the NSE and 824 advances and 2,033 declines on the BSE.

On the hourly chart, Nifty is trading below its 20 hourly moving average (HMA) and 40HMA at 5049 and 5013 respectively, which are now resistances in the short term. The momentum indicator (KST) has given negative crossover and trading below the zero line.

Nifty and Sensex closed in red losing 80 and 268 points respectively. Of the 30 Stocks of the Sensex Bharti Airtel (down 8.05%) and Reliance Communications (down 5.60%), Grasim Industries (down 7.10%) and Hindalco Industries (down 6.75%) were the top losers while ITC (up 2.58%) and Cipla (up 1.40%) were the top gainers.

To see full report: EAGLE EYE 06/10/09