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Friday, August 6, 2010


Profit booking in key index heavyweights dragged the benchmark indices into the negative territory in the final trading hour.

Profit booking in energy, banking and pharma stocks led the indices to shed all the gains seen in the early hours of trade. The BSE Sensex lost around 45 points (0.2%) while NSE Nifty was down around 20 points (0.4%).the Asian indices closed a mixed.

For today Intra-day, Nifty has a support at 5426 & 5401 and faces resistance at 5467 & 5507. Nifty above 5471 will set a target of 5488, 5504 & 5517. Nifty below 5418 will set a target of 5401, 5381 & 5364. Last trading action is mark as a Bearish candle with a long shadow and thick real body. No wonder last trading action Nifty has occur some profit taking but upside journey will remain intact until Nifty stand above 5428 on closing basis. Nifty above 5428 will see upside till 5507, 5526 & 5556.

For Short term, Nifty has a support at 5414 & 5292 and faces resistance at 5476 & 5519. As we can see from above chart,markets is trading is a big channel Blue channel wherein facing resistances at upper end of the channel and support at lower at lower end of the channel. From Bse Sensex daily chart, it has completed both side of trend in which it has finished upper side by testing upper end of the channel (i.e. 18048) and ended downside by testing lower end of the channel (i.e. 15960). After
forming bottom, as per the tradition Bse Sensex has started moving towards upper end of the channel (i.e.18364). As earlier we mention in our report that as per market oscillators Nifty has the potential to crossover recent top (5478). Last session Nifty has hit new high at 5487. On higher level traders has to be cautious near 5526 to 5556 at these levels profit taking can be seen.

After last session high, Nifty continue its trading pattern of higher top and higher bottom on weekly chart indicates more Upside.

Now the question arise where is Nifty heading? Technically speaking, having a look at monthly chart Nifty has given a break out of upper end of the channel. Moreover as per Wave count, Nifty has rally from 920 (Oct. 2002 Bottom) to 6357 (January 2008 Top) is mark as Wave A. Subsequently, Nifty corrected till 2253 (October 2008 Low) which is 75% of the rally & even

64% cut from top. After taking support at 2253, Nifty did consolidated almost 6 months and with the recent high at 5453 Nifty has recovered 78% of the entire fall. However, as per moving average Nifty closes below 5122 on weekly basis will provide Negative Divergences and which will states that Nifty has start Sub-Wave B (corrective wave) in Wave C or up move continue.

As Long as Nifty stays above 5366 (Closing basis), we remain POSITIVE on Nifty.