Close below 40-DEMA

Markets on February 16: Brisk fall

The Indian indices began the day on a flat note. Thereafter for few minutes markets
remained in the shade of previous swing highs. However all the attempts to clear the
previous swing highs went in vain and markets went downwards on a brisk note. Finally
Sensex closed lower by 329 points, while the Nifty closed lower by 100 points. Stocks
from the mid-cap and small-cap indices too ended the day on a negative note. On daily
candlestick chart, Sensex has formed a Black Opening Marubozu candle (a bearish
candle with no upper shadow). Further the Marubozu candle has fully engulfed the
previous candle, thus forming a Bearish Engulfing pattern, which is not a good sign for
the bulls. On intraday charts, the indices has formed double top, whose target is not yet
achieved. Further on daily charts, Nifty has closed below 40-daily exponential moving
average (40-DEMA). On downside support is expected at 20-daily simple moving
average (20-DSMA). The gap between daily KST and the moving average has got
slimmed and is about to give a negative crossover. Market breadth was totally dominated
by bears with 939 declines and 258 advances.

Hourly momentum indicator KST is still in the sell mode with negative divergence and is
trading below the zero line. Both our short- and mid-term biases are down for the target
of 2775 and 2450 respectively with reversal packed at 2960 and 3111.

Broad based selling was witnessed across all the sectors with stocks from the metal and
Realty leading the pack of losers. From the 30 stocks of Sensex only ITC (up 0.75%) led
the pack of gainers. However Jaiprakash Associates (down 8%), Reliance Infra (down
6%) and ICICI Bank (down 6%) led the pack of losers.