Thursday, July 9, 2009


The Show Is About To Begin

Big Test For The Bulls At 15250
The indices witnessed a quiet first half last week as they consolidated in a range and took support at the mentioned level of 14300 only to rebound and end the week on a strong note. There are minor bullish triggers on the pattern and indicator studies hinting at a rally into the resistance zone of 15100-15250 (4500+ on the Nifty) this week. For the Sensex to re-visit and break past its recent high the level of 15250 will have to be taken out on a closing basis. A short-term base has been formed in the 14000-14300 zone (4100-4200 on the Nifty) and only on a close below the same does the uptrend come under threat, which seems unlikely. Broadly the index continues to consolidate within the 14000-15600 zone from which an upside breakout can be expected sometime this month. The moving averages have not been broken even once since the uptrend began in the 1st week of Mar 09 and hence the same needs to be monitored regularly going forward. The charts suggest that the Banking sector might be the biggest beneficiary from the event this Monday. The sector could move up 12-15% within a few weeks. Most Asian markets continue to be safely placed above support levels while the DOW (DJIA) is likely to see a rebound from the 8000-8300 support zone.

Patterns – Nice And Clear
The rally last Friday was encouraging as it helped the indices move above minor resistance levels and negate a bearish “Evening Star” pattern that existed on the daily chart. At this point a new “Ascending Triangle” pattern can be spotted on the hourly chart that should take the Nifty into the 4500-4530 zone.

GAIL – One Step Up
After trading sideways for many weeks the stock has confirmed a major breakout late last week that should lead to sizeable upside in the short and medium-term. A move back to its lifetime high of 367 is likely within a few months or earlier. Anant Raj Industries – Ready To Freeze The stock has developed a strong set-up in the last few weeks. By taking out the resistance of 108 last Friday on good volumes the stock has confirmed the next leg of the uptrend that should take it back close to 145 levels.

Bulls Vs Bears

GAIL (Rs. 316)

The stock stayed in a range for almost the entire month of June 09 and confirmed a breakout late last week. A number of bullish patterns can be spotted calling for a 50+ Rs. move in the coming few weeks. The zone of 285-295 now becomes a base for the rest of this month with minor resistance at 325. The volume activity pick-up last week supported the price action breakout and is a positive sign.

STRATEGY: Buy in the region 310-316 with a closing stop loss below 288 for a short-term target of 350 and 368.

Support: 310 and 295 Resistance: 325 and 350

To see full report: TECHNICAL ANALYSIS