Inside bar

Markets on June 3, 2009: Indecision still prevails

After falling into the red during the afternoon session, persistent buying activity during
the second half of trade led the indices to end the day on a flat note. Sensex ended the day
lower by 4 points, while Nifty closed higher by 5 points. Stocks from the mid-cap and
small-cap spaces continued their upsurge as they ended the day with gains of around
1.5% and 2.1% respectively. Again for the second consecutive day the indices ended the
day on a flat note, which indicates that the tug-of-war between the bulls and the bears is
going strong and the indecision about the next decisive move still prevails. Additionally
we are having an inside bar after the end of today’s session, which adds to the game of
indecision. So unless we get a breakout of the inside bar, be cautious. Upside breakout of
the inside bar will occur above 4587, while downside breakout will occurs below 4451.
Negative crossover of momentum oscillator KST still prevails. Market breadth is positive
with 883 advances and 381 declines.

20-hourly simple moving average is still intact. Our short-term bias is down for the target
of 3900 with reversal packed at 4510. However our mid-term bias is up for the target of
4550 with reversal placed at 3700.

While buying activity was witnessed in stocks from the FMCG, consumer durables and
healthcare spaces, stocks from the banking and IT space ended the day on a negative
note. From the 30 stocks of Sensex Hindalco (up 6%), ITC (up 6%) and Jaiprakash
Associates (up 5%) led the pack of gainers, while Mahindra & Mahindra (down 4%),
Infosys (down 2%) and State Bank of India (down 2%) led the pack of losers.