Tuesday, September 1, 2009

>Second day in red (SHAREKHAN)

Markets on Sep 01, 2009: Sudden sell-off

Taking positive leads from markets abroad, the Indian stock market opened optimistic and bounced to the high of the previous rally. But in the second half there was a sudden sell-off and the indices dipped to the day’s lows. Nifty closed in red for the second day in trot taking resistance around 4750, which has been acting as crucial resistance for the last many weeks. Nifty has been holding on to 61.8% retracement i.e. 4750 of the fall from 6357 to 2253, where it has been trading for the last couple of months. Nifty is currently trading above 20 daily moving average (DMA) and 40DMA i.e. 4575and 4494 respectively, which are crucial support levels going forward. The momentum indicator (KST) has given a positive crossover and is trading above the zero line.

On the hourly chart, Nifty was trading in a channel, which has been broken on the downside and the index is also trading below 20 hourly moving average (HMA) and 40HMA i.e. 4676 and 4653 respectively, which is a bearish sign for the market in the immediate run. Our short-term bias is up with reversal at 4350 and target at 4780. The market breadth was negative with 423 advances and 849 declines on the NSE and 1,193 advances and 1,674 declines on the BSE.

Nifty is 37 points down and the Sensex is 115 lower at the closing bell today. Of the 30 stocks of the Sensex, ACC (down 4%) and Ranbaxy laboratories (down 3.2%) were the top losers, whereas Maruti Suzuki India (up 7.30%) and Tata Motors (up 6%) were the top gainers. Selling was witnessed in metal and cement sector stocks, while auto sector outperformed the market.

To see full report: EAGLE EYE 020909