The broader markets have snapped the two-day losing streak on Monday and have sort-of reversed directions.
The NIFTY (Have switched analysing Nifty from SENSEX now - neways they move in tandem J)
Its forming an Inverted Head & Shoulder formation. The breakout though is yet to happen - its around 5600 levels. A sustained breakout should make the NIFTY head to the resistance of 5697 and clearing which, to 5738 levels. The Technical indicators also are positive.
The big question is- Are we beginning to see a recovery in the markets now?
The crude prices were seen dropping since few days
We are seeing a marginal drop in the headline inflation which is further expected to reduce due to base effect in the coming months (and hopefully a good monsoon too)
The earnings growth of the companies have slowed a bit due to margin pressured but not drastically.
Interest rates are mostly at the peak - could be up 50 bps (which is very much on the cards and expected by the street).
The negatives are from a troubled eurozone which may pose macro risks.
A Quick look on some interesting charts we observed:
RIL: Finally breaks out of the range on the upside leaving a pattern.
A quick bounce should be expected as the indicators are positively placed. The Heavy-weight should be a major decider for the NIFTY too.
Punjab National Bank: PNB is one Stock better placed technically among the banking-pack.
A crucial resistance needs to be crossed for the upmove.
Sun Pharma: This is one stock that has been a technical favourite. It had broken out of a double bottom and made a quick trade last time. The stock now seems to be clearing the channel resistance line too.
Since the markets are in an oversold zone too, the stoploss must be a tight and a trailing one.
Patel Engineering: It cannot be but co-incidence that another inverted H&S is identified. J
Patel Engg. was also in a huge downtrend since the half of 2010.
The pattern could be a trend reversal for this stock. Refer to the chart for price specifics.
Now a look on some weekly charts
Caution is to be taken here as the period of holding may be of a medium term
Usha Martin : Its showing price divergence where we can see that the price has made an identical bottom but the RSI has made a higher one. A quick jump may be expected for the stock.
A similar situation is in VOLTAS Ltd. Refer to the charts for price specifics.