In the last week’s review we discussed about “harami” candlestick pattern and it could be a confusing signal unless confirmed by a green candle and positive close above 4530. For this to happen, the index had to gain about 128 points, preferably with a full upward gap or even a partial upward gap. I had also mentioned that it didn’t seem to be a possibility since bulls were losing momentum on Friday.
As expected, confirmation couldn’t be achieved on Monday, as the market lost 62.05 points. However the bulls were seen in action on Tuesday as the market gained 16.85 points. But it formed an “inverted hammer” meaning the index was brought back near its opening price due to sell off at higher levels. On Wednesday the bulls were in perfect control; the Nifty gained 105.75 points. Again, a “three inside up pattern” was formed. The index achieved a high of 4530 on Thursday before collapsing once again by 58.90 points. So 4530 has acted as a strong resistance for the index. On Friday the market was deep in red with the index losing 164 points at one stage. However, the afternoon session saw bulls coming back once again. Nifty had lost 69.85 points today. On weekly basis the index has lost 68.20 points or about 1.55%.
In the daily chart of Nifty, we can see the “Three inside up” pattern (“Harami” followed by a green candle and higher close). Since the bulls failed to cross 4530 and after yet another fall, we have to maintain 4218 as the next support level.
Now that the index has closed below 4363 on Monday/Tuesday as well as today this should act as a minor resistance when Nifty reverses. Let us discuss the Fibonacci retracements as shown below.
It can be seen that 4310 (61.8% retracement level) has not yet been breached on a close basis, though low went below it on a couple of occasions. A close below this level would mean that when index reverses, it may find difficult to break its resistances and the trend may not be strong.
The intraday chart of Nifty for Thursday is been shown below. On Thursday bulls lost control in the afternoon while today they were back in action after 2 pm. Thursday’s quick fall meant that the market had a strong negative opening today. The bulls have managed to break intraday resistance and this could be positive for next week.
Today’s intraday chart is given below:
Intraday charts courtesy: NSE
Forecast for next week:
In all probability the market should recover and reverse in the coming week. We saw a strong lower side volatility and intraday resistance breakout today. At market tops and bottoms, volatility will be very high. So the level of 4310 needs to be watched on a close basis. A close below this will make the index more sluggish during pullback rally. A close above 4530 will mark the return of bulls and the market will be ready for further uptrend.
Advance / Decline Ratio:
| Date | Adv. | Dec. | Unch. |
| 06-Aug-07 | 314 | 790 | 24 |
| 07-Aug-07 | 724 | 369 | 31 |
| 08-Aug-07 | 841 | 258 | 31 |
| 09-Aug-07 | 268 | 843 | 24 |
| 10-Aug-07 | 309 | 799 | 26 |
This leads to an overall advance % of 43.46, decline % of 54.13 and unchanged % of 2.41% for the week.
Top Gainers / Losers among Index stocks:
| Scrip | % Gain | Scrip | % Loss |
| HCLTECH | 6.82 | VSNL | 8.57 |
| GLAXO | 5.74 | HINDALC0 | 6.98 |
| TCS | 4.34 | STER | 5.86 |
| SUZLON | 4.28 | ICICIBANK | 5.61 |
| BPCL | 2.30 | GAIL | 5.10 |
Top Gainers / Losers in overall market:
| Scrip | % Gain | Scrip | % Loss |
| ETCNET | 92.71 | ABGSHIP | 17.63 |
| CONSOFINVT | 40.03 | LOKESHMACH | 11.45 |
| ORBITCORP | 37.79 | IBREALEST | 11.11 |
| RUCHIRA | 29.92 | RENUKA | 10.91 |
| JAICORPLTD | 27.63 | GREAVESCOT | 10.37 |
Please note that only ‘A’ group and ‘B1’ group stocks of Bombay Stock Exchange (BSE) are considered for the above table.
ETC Network is a case of bear trap. Orbit Corporation was The India Street short term pick. From 272.70 on June 29 it has appreciated to 504.30 today (85%). We discussed about Indiabulls Real Estate in “Technical review of select India stocks for medium term” and Shree Renuka Sugars in “How do IPO’s fare in Secondary Market?”.
The India Street analyzed Puravankara Projects Limited IPO. The issue closed on August 8 after the price band was revised to Rs.400/- to Rs.450/- per share. It got oversubscribed by 1.91 times. Qualified Institutional buyers oversubscribed the issue by 2.69 times, high networth individuals by 0.99 times and retail investors by 0.64 times. Omaxe got listed on August 9. It was issued for Rs.310. It opened with a premium of Rs.100 at Rs.410. It reached a high of 448 after listing. However, it couldn’t sustain selling pressure at higher levels and closed today at 345.75.
Our short term pick India Glycols closed at 184.80 on August 8, gaining 12.55% since our analysis on July 18. Long term pick Nagarjuna Fertilizers gained about 13.20% this week. Apart from these there are no other major movers among our short, medium or long term picks.