Weekly Bearish Engulfing

Markets on August 7, 2009: Whipping continues

The markets open on a negative note reflecting weak global cues and continued to tank
lower throughout the day. With weekly Bearish Engulfing pattern (a reversal pattern as
per candlestick charting) and weekly KST cycle maintaining its bearish standpoint, bears
are going to gain an upper hand. On daily chart, Nifty is currently resting at 20-days
simple moving average (20-DSMA), packed at 4471. Once that is violated on closing
basis then markets will see massive sell off. However hourly momentum cycles are
oversold and Nifty is near a good support level of 4420. So trader should look for a
bounce before adding fresh shorts. However any long positions from here on are not
recommended. Daily KST continue to dampen in sell mode. Bears totally dominated the
market breadth with 1007 declines and 267 advances.

Our short-term bias is revised down for the target of 4325 with reversal packed at 4732.
However our mid-term bias is still up for the targets of 5000 with reversal packed at
4325.

Broad based selling was witnessed across the board with Consumer durables, Auto,
Realty and Banking heading the pack of losers. From the 30 stocks of Sensex only NTPC
and Tata Steel marked the pack of gainers while Reliance Communication (down 6%),
Jaiprakash Associates (down 5%) and Mahindra & Mahindra (down 5%) led the pack of
losers.