Pattern breakout

Markets on February 7: Gap up

Mirroring the global markets, Sensex opened the day with an upside gap. The index
remained range bound up till noon. Thereafter, they gained momentum on the back of
persistent buying to close well in green. The Sensex closed higher by 298 points, while
the Nifty closed higher by 76 points. Stocks from the mid-cap and small-cap indices
ended in the green as well. On daily chart, Nifty gave a positive breakout from an
inverted Head-and-shoulder pattern, whose conservative target is nailed at 3000. Also
Nifty has closed above 40-daily simple moving average. Hourly chart shows that the
bullish channel of Nifty is still intact, which indicates that currently bulls are on the safer
side. Daily KST is diverging away from the signal line and has also broken above the
zero line. Bulls dominated the market breadth with 802 advances and 392 declines.

On hourly chart, momentum indicator KST is still riding its positive crossover. Our short-
term bias is revised up for the target of 3000 with reversal packed at 2752. However our
mid-term bias is still down for the target of 2450 with reversal packed 3111.

Stocks from the metal, energy and capital goods sectors led the pack of gainers, while
stocks from the FMCG and IT sectors remained less in favor. From the 30 stocks of
Sensex Jaiprakash associates (up 9%), Tata steel (up 7%) and Reliance infra (up 7%) lead
the pack of gainers. On the other hand Hindustan Unilever (down 0.5%) was the only
loser in today’s session.