Sign of caution

Markets on June 5, 2009: Lackluster

After opening on a muted note, the Indian indices continued their northward journey
throughout the day. However, during the final hour of trade, on account of profit booking,
the markets came off from the days’ high. Finally Sensex closed higher by 88 points,
while Nifty ended higher by 14 points. Stocks from the mid-cap and small-cap indices
ended lower, with a fall of 0.67% and 1.02% respectively. On hourly chart though we
saw a breakout from a bullish pattern, but the does not seem to be favoring the current
flow, which is a sign of caution. On downside if 40-hourly exponential moving average is
broken then we may see a sell off. Daily momentum oscillator KST is still in the sell
mode, which suggests that if in the coming 2-3 days we do not see a sell off then there is
a very high probability that bulls will drag the markets in their corner. The overall market
breadth was marginally positive with gainers outnumbering losers in ratio of 1.1 to 1 on
the BSE.

Hourly momentum indicator KST is trading flat. Our short-and mid-term biases are still
up for the targets of 4700 and 4850 with reversal packed at 4134 and 3861 respectively.

Stocks from the engineering, software and auto sectors led the pack of gainers, while
select realty and FMCG stocks ended the day on a weak note. From the 30 stocks of
Sensex Grasim (up 6%), Tata Motors (up 5%) and BHEL (up 5%) led the pack of
gainers, while ITC (down 5%), Reliance Infra (down 4%) and State Bank Of India (down
3%) led the pack of losers.