S&P CNX NIFTY- Daily Technicals

May 29, 2012

Current Observation: Post upside breakout of the resistances of 4950-60, Nifty witnessed breather in todays session and maintained its higher high status by closing with the marginal gain of 4 points. Nifty opened today on a minor gap up of around 15 points and continued its upward trend. Being not able to scale above the days high of 5020 levels witnessed minor profit booking and finally closed just below the psychological mark of 5000 levels. We observe that Nifty has sustained today above another key resistance of mid bollinger band around 4970 levels, as on closing basis. After a fall in volume during previous rising session, Nifty witnessed consolidation in todays session with the rise in volumes (as compared to previous day). Negative swing indicator like -DMI line has slopped down consistently by forming lower lows and is now placed at the edge of loosing its dominance. This pattern has occurred after the formation of negative divergence in that indicator.

Conclusion: After a decisive upside breakout of the resistance of 4950-60 levels, Nifty taking breather in todays session is a normal behavior as per the theory of upside breakout and this is a price continuation pattern. The prior breakout area of 4960-50 could act as a strong support for Nifty for any decline from here, as per the principle of change in polarity. Nifty maintaining higher high status (closed on a marginal gain as compared to last session) and sustaining above the key hurdle of mid bollinger band is an indication that more upside is in store. Nifty could even retest the upper bollinger band as its next target (upper band is currently placed around 5190 levels). Negative swing indicator like DMI line weakening by forming negative divergence pattern is an early warning that the DMI line might loose its dominance in near term. This could pull Nifty to further upward levels. Summing Up: Nifty showing a breather pattern after an upside breakout of resistance is a natural behavior and is a price continuation pattern. After consolidating near the support of 5160-50 levels, we could see further up move in Nifty towards its next target of 5062 levels.

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Analyst: Nagaraj Shetti (nagaraj.shetti@hdfcsec.com) HDFC Securities Limited, I Think Techno Campus, Building B, Alpha, Office Floor 8, Near Kanjurmarg Station, Opposite Crompton Greaves, Kanjurmarg (East), Mumbai 400042, Fax: (022) 30753435 Disclaimer: This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This document is not to be reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended for nonInstitutional Clients only.

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