PCG Desk | India SUBODH GUPTA, CMT Technical Analyst. PCG T: 022 66551 252 subgupta@mfglobal.

26TH MARCH 2012

Technical Stock Picks

Nifty & DJIA – At crucial support levels
Nifty continued its range bound movement for the fifth consecutive week as markets continue to discount events on domestic and international fronts. Market moved in a range between 5210 and 5380(spot levels) levels during the entire week as bulls continued to protect the important level of 5200.

Nifty is presently trading near the crucial 200 days moving average where 5200 and 5150 will act as a crucial supports for the market. A close below these levels will indicate the end of the upmove and start of a potential downtrend which will take Nifty again towards new lows. However momentum indicators indicate that market has more probability for upside breakout rather than a trend change.

Pattern analysis of the markets indicates formation of a potential pole and flag pattern with prices taking support at 38.2% of the retracement of the entire upmove. The third wave of the flag has been completed, and one can expected another rangebound move before market breaks our of consolidation. Even in case pattern fails, Nifty is expected to touch the previous high (5615) thereby making a double top formation.


The correction witnessed in Nifty was not deep in DJIA as domestic factors including budget were drivers of the Indian market. Our strategy for the same would be to buy Nifty above 5360 for a target of 5615 with a stop loss of 5290.Technical Picks | India 25/03/2012 MF GLOBAL | PCG DESK Looking at the present technical evidences. (spot levels) DJIA View Dow Jones Industrial Average (DJIA) has been a leader in the recent rally with the American index outperforming Nifty. Presently 5360 (spot) is a very crucial resistance level for Nifty and a close above that will take Nifty towards its previous high of 5615 levels. However on larger time frame 2 . we feel Nifty to be in a CORRECTION rather than a trend change.

3 .Technical Picks | India 25/03/2012 MF GLOBAL | PCG DESK we expect DJIA to continue to be the key trend decider of Nifty in coming days. DJIA continues to be in uptrend with prices moving in an upward sloping channel. On an immediate basis 13000 is a very important channel support for DJIA and a close below that level would mean a channel breakdown. With Stocastics in oversold zone and RSI not able to breach 40 levels it is safe to assume that markets have a high probability of bounce from these levels. However a close below our mentioned levels may lead to a trend change in DJIA.

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