Pattern Breakout

Markets on June 26, 2009: Bulls go mad

Constant buying activity during the day led the markets to end the week on a strong note.
Sensex ended higher by 419 points, while Nifty closed up by 133 points. Stocks from the
mid-cap and small-cap spaces ended the day on a positive note, recording gains of 2.4%
and 1.9% respectively. Nifty after taking the support at 61.8% retracement level (i.e.
4221) surged in the skyward direction. Clearing of both 20- and 40-hourly averages were
achieved during the day. The inverted Head-and-shoulder pattern on intraday chart also
saw a breakout above the neckline, according to which the target for Nifty comes around
4425. The overall advance to decline ratio was positive with 873 advances and 367
declines.

Our short-term bias is up for the target of 4450 with reversal packed at 4100. However,
our mid-term bias is down for the target of 3870 with reversal placed at 4700.

Buying activity was witnessed in stocks from the banking, consumer goods and IT
spaces, while stocks from healthcare ended on a negative note. From the 30 stocks of
Sensex ICICI Bank (up 8%), Sterlite Industries (up 6%) and Larson & Toubro (up 5%)
led the pack of gainers, while Ranbaxy (down 4%) and Tata Steel (down 3%) led the
pack of losers.