Monday, May 11, 2009

>Daily Market & Technical Outlook (ICICI Direct)

Key points

  • Market Outlook — Open flat and trade with a negative bias
  • Positive — Inflation not in negative territory
  • Negative — FIIs selling, MFs selling consistently

Market outlook

■ Indian markets are likely to open flat following Asian cues. Our markets will be volatile before election results are announced on Saturday. The markets will rally from here if a stable government is formed at the Centre. So, traders are advised again not to take aggressive trading positions till further direction is gauged. Till then one can take stock specific positions and keep booking profit at higher levels

■ The Sensex has supports at 11770 and 11630 and resistances at 12270 and 12560. The Nifty has supports at 3590 and 3550 and resistances at 3670 and 3730

■ Asian markets were trading mixed in the morning session. The Nikkei is trading marginally down while Taiwan and Hang Seng is up mildly

■ US stocks rose on Friday, and the Nasdaq capped its longest stretch of weekly gains in a decade as stress results and reassuring jobs data fuelled hopes the worst is over for banks and the economy. For the week, the Dow rose 4.4% while the S&P 500 gained 5.9% while the
Nasdaq jumped 1.2 %. The Nasdaq registered its ninth straight weekly advance, the longest such streak for the index since an 11-week climb in December 1999. Since hitting a 12-year closing low in March, the S&P has surged 37.4% but is still down 40% from its record of October 2007

■ Stocks in news: Maruti, Bhel, Marico

Technical Outlook

We said, “Failure to trade strongly above the day’s high would prove the corrective nature of yesterday's action and test the lower range of the sideways action.” The Index failed to sustain at higher levels and tanked 400+ points intra-day to end 2% lower. The Bankex lost
3.2%. The A/D ratio also turned negative.

The action formed a bigger bear candle than Wednesday's. Its low, at 11765, is closer to the Green support line, which is currently at 11600. Holding 11765 can test the upper end of the Red channel at 12100-50. It is positive if it trades above the channel. The resistance at the upper Red channel can, however, be negative.

To see full report: OPENING BELL 110509