>EAGLE EYE ON 12/10/09 (SHAREKHAN)

Guidance positive: divergence negative

Markets on Oct 09, 2009: 4900 held again
Nifty opened in green on optimistic note from Infosys Technologies’ positive guidance but failed to sustain at higher levels and finally closed at the day’s low. The index is trading within in the range of 4900-5150 where 4900 remains a crucial support, as that’s been held for the third time now. Nifty is unable to move higher as the weakness continues in the momentum indicators, which are heading lower. With such a negative divergence the trend remains weak, so now 4900 will be important going forward, as a close below that will lead to further selling pressure.

On the daily chart, Nifty is trading between its 20 daily moving average (DMA) and 40DMA at 4954 and 4777 respectively, which are crucial supports in the near term.

The momentum indicator (KST) has given negative crossover and is above the zero line. The market breadth was negative with 371 advances and 879 declines on the NSE and 1,037 advances and 1,832 declines on the BSE.

On the hourly chart, Nifty is trading below its 20 hourly moving average (HMA) and 40HMA at 5005 and 5020 respectively, which are now resistances in the short term. The momentum indicator (KST) has given negative crossover and is trading below the zero line.

Nifty and Sensex closed marginally in red losing 57 and 201 points respectively. Of the 30 Stocks of the Sensex, Ranbaxy Laboratories (down 4.70%) and Tata Motors (down 6.66%) were the top losers, while Bharti Airtel (up 2.54%) and ONGC (up 1.40%) were the top gainers.

To see full report: EAGLE EYE 12/10/09