Market Out Look 26-12-09

OM NAME BHAGAVATHE SREE RAMAKRISHNAYA


MARKET OUT LOOK ( NIFTY 28-12-09 TO 1-1-10)

The nifty ended at 5129.05 on 24th December 2009 for the trading week. The gains posted by Nifty were 190.70 points or 3.82% over previous trading week. In my last week write up I opined that “Based on the above I am of the opinion that Nifty is likely to find support around 4968-4954 and after under going some relief rally the down ward journey again is likely to continue in days to come”

Let us examine the movement of Nifty

Date Open High Low Close

12/18/2009 5042.00 5043.40 4979.05 4987.70

12/21/2009 4983.65 4997.85 4943.95 4952.60

12/22/2009 4953.35 4997.30 4953.35 4985.85

12/23/2009 4990.05 5150.60 4990.05 5144.60 Change %

12/24/2009 5144.80 5197.90 5129.05 5178.40 190.70 3.82



Nifty touched a low of 4943.95 on 21-12-09 and later bounced back to 5197.90 on 24-12-09. In the chart I have sent (hope at least some of you have opened and seen it) I mentioned targets of 5089.00 and 5191.51 both of which were met. Now the first part of the opinion has materialized. Now let us examine with the help of technical analysis, what will be the likely behavior of Nifty in days to come.

Let us examine the Nifty chart (chart 1)



Nifty on the opening day of trading week opened low and closed low. Last three trading days, Nifty traded higher and closed in positive territory and posted smart gains. The range on last trading was narrow.

The move started at the lower Bolinger Band reached the upper band, as is evident from the chart(1), and Chande Momentum index crossed it’s 9 day’s moving average from below and trading above it.

Let us examine the Nifty chart with R-squared(chart2). The Nifty touched the upper band of projection bands and Rsquared is falling down. The present value of Rsquared is .05 and critical value is 0.27,which shows that the uptrend is not strong enough.

The Chande momentum oscillator turned up without reaching the over sold area.



Let us examine the Nifty Envelops chart, the lower band of envelops is yet to be touched by Nifty.

Based on the above I am of the opinion that Nifty is likely to see some correction in days to come.

Regards

Subrahmanyam