Saturday, June 9, 2007

Weekly review of Indian stock markets – 08.06.07

Index this week:

In the last week’s review, I had mentioned:

“The engulfing pattern seen at the top of the trend on 31.05.07 is not a helathy sign. It was further confirmed by the sell off next day, with a very long upper shadow. We can anticipate a correction now upto 4039 or 3902.”

The nifty closed at 4145, losing 152.05 points on weekly basis or about 3.54%.

As such, there were no reversal signs last week but we got a confirmation of the short term trend reversal now. The nifty is bearish now and we can expect the nifty to hit its support at 3902.

Watch the bearish engulfing pattern followed by a red candle and lower close (also known as three outside down pattern), a highly reliable 3 candlestick pattern in the daily chart of nifty shown below.

The nifty has already broken and closed below its first support at 4218. The upward movment from 3617 to 4218 had very minor corrective declines; if we consider the next high it would be 4039. After that it is 3902. These two levels should act as supports.

Going by the theory of “an ideal bull market” usually 50% retracement should be a good support. This level is 3990. So, anywhere between 3990 and 4039 nifty may be able to bounce back.

Remember that these levels are only indicative and actual levels may significantly vary from the numbers given above.

In the weekly chart also, one may find the “bearish engulfing pattern” formation as shown below. However we need a confirmation on a weekly closing basis to decide on the medium term trend reversal.

Status of index stocks in daily/weekly charts:

The following table illustrates the movement of index stocks in daily and weekly charts (bullish/bearish/sideways)

Scrip

Status

(Daily)

Status

(Weekly)

Weekly

Gain %

Remarks

ABB

Bearish

Bullish

(3.57)

"Dark cloud cover pattern" in weekly chart needs confirmation next week

ACC

Bearish

Bearish

(10.00)


BAJAJAUTO

Bearish

Bearish

(5.59)


BHARTIARTL

Bearish

Bullish

(3.07)


BHEL

Sideways

Bullish

(7.60)

"Bearish engulfing pattern" in weekly chart needs confirmation next week

BPCL

Bearish

Bearish

(8.23)


CIPLA

Sideways

Bearish

(5.74)


DABUR

Sideways

Sideways

0.82


DRREDDY

Bearish

Bearish

(2.71)


GAIL

Sideways

Bullish

(7.32)

"Bearish engulfing pattern" in weekly chart needs confirmation next week

GLAXO

Bullish

Bullish

(1.18)


Scrip

Status

(Daily)

Status

(Weekly)

Weekly

Gain %

Remarks

GRASIM

Bearish

Bearish

(5.14)


GUJAMBCEM

Bearish

Bearish

(4.75)


HCLTECH

Sideways

Bullish

1.19


HDFC

Sideways

Bullish

(6.11)

"Bearish engulfing pattern" in weekly chart needs confirmation next week

HDFCBANK

Sideways

Bullish

(5.42)

"Bearish engulfing pattern" in weekly chart needs confirmation next week

HEROHONDA

Sideways

Bearish

(4.47)

"Bearish harami pattern" in weekly chart needs confirmation next week

HINDALC0

Bullish

Sideways

11.95


HINDLEVER

Bearish

Bearish

(6.25)


HINDPETRO

Bearish

Bearish

(11.73)


ICICIBANK

Sideways

Sideways

(2.90)


INFOSYSTCH

Bearish

Bearish

0.63


IPCL

Sideways

Bullish

(4.16)

"Bearish engulfing pattern" in weekly chart needs confirmation next week

ITC

Bearish

Bearish

(6.49)


LT

Sideways

Bullish

(5.77)


M&M

Sideways

Bearish

(5.82)


MARUTI

Bearish

Bearish

(9.08)


MTNL

Sideways

Sideways

(4.71)

"Dark cloud cover pattern" in weekly chart needs confirmation next week

NATIONALUM

Sideways

Bullish

2.40


ONGC

Bearish

Sideways

(5.11)


PNB

Bearish

Sideways

(6.92)

"Bearish engulfing pattern" in weekly chart needs confirmation next week

RANBAXY

Bearish

Sideways

(5.62)

"Bearish engulfing pattern" in weekly chart needs confirmation next week

RCOM

Bullish

Bullish

1.61


REL

Sideways

Sideways

(3.93)


RELIANCE

Sideways

Bullish

(5.38)

"Bearish engulfing pattern" in weekly chart needs confirmation next week

RPL

Sideways

Bullish

(1.46)

Near resistance zone

SAIL

Bearish

Sideways

(10.06)


SATYAMCOMP

Bullish

Bullish

3.16


SBIN

Bearish

Bullish

(1.62)

"Bearish three outside down" pattern in daily chart

SIEMENS

Sideways

Bullish

(1.59)

"Dark cloud cover pattern" in weekly chart needs confirmation next week

STER

Sideways

Sideways

(2.59)


SUNPHARMA

Sideways

Bullish

(3.33)

"Bearish engulfing pattern" in weekly chart needs confirmation next week

SUZLON

Bullish

Bullish

4.14


TATAMOTORS

Bearish

Bearish

(12.80)


TATAPOWER

Sideways

Bearish

(1.97)

"Dark cloud cover pattern" in weekly chart confirmed this week

TATASTEEL

Sideways

Bullish

(7.79)


TCS

Sideways

Sideways

0.11


VSNL

Sideways

Bearish

(0.86)

"Dark cloud cover pattern" in weekly chart confirmed this week

WIPRO

Sideways

Bearish

0.62


ZEEL

Bearish

Sideways

(7.06)


From the above table, we can see clear trend in both daily and weekly charts in few stocks whereas in others some indecision exists. Dabur, HCL Tech, Hindalco, Infosys, Nationalum, RCOM, Satyamcomp, Suzlon, TCS and Wipro have gained this week where as the rest are losers. Glaxo, RCOM, Satyamcomp and Sulzon are bullish and ACC, BAJAJAUTO, BPCL, DRREDDY, GRASIM, GUJAMBCEM, HINDLEVER, HINDPETRO, INFOSYSTCH, ITC, MARUTI and TATAMOTORS are bearish. Interesting to note the bearish candlestick pattern formations in the weekly chart – many need confirmation next week! This makes an interesting week ahead.

Advance Decline Ratio:

Date

Traded

Advanced

% Adv

Declined

% Dec

Unchanged

% Unch

04/06/07

1101

404

36.69

665

60.4

32

2.91

05/06/07

1103

534

48.41

527

47.78

42

3.81

06/06/07

1105

228

20.63

852

77.1

25

2.26

07/06/07

1103

388

35.18

672

60.92

43

3.9

08/06/07

1101

350

31.79

723

65.67

28

2.54

Totals

5513

1904

34.54

3439

62.38

170

3.08

This means that the bears have dominated during the week.

Following table gives the list of top 5 gainers and losers among cash stocks:

Scrip

% Gain

Scrip

% Loss

BLBLIMITED

41.31

VAIBHAVGEM

16.60

PARAL

32.84

TVSELECT

15.94

KERNEX

29.94

SGL

16.38

TIMESGTY

28.22

IILTD

15.67

RUBYMILLS

27.64

HILTON

16.17

Conclusion:

As anticipated last week, a corrective decline happened in the market. We need to wait for further confirmation this week. Let us expect that the index and stocks bounce back this week!!