Weekly review of India stock market – February 9, 2008

In the last week’s review it was mentioned that the Nifty is likely to get corrected some more. The rally on Monday was not sustainable as the Nifty fell by around 350 points on Wednesday and Thursday. Friday was volatile but the index managed to bounce back during the afternoon session.

Nifty continues to be bearish for the short term. This is clear as it formed a new low of 5034 on Friday compared to 5071 on January 31.

No reversal signs have appeared in weekly chart of Nifty. During the previous week, lower side volatility was high; this week it is exactly the other way around: higher levels attracted selling. 45% of the stocks advanced and 55% declined during the week.

We shall maintain our view that since the support has not been broken yet, the Nifty continues to be bullish for medium term.

Stocks which look bullish for short term:

Granules:

The stock has breached its resistance at 90 on Friday. This can be confirmed by the volume as well. It has a technical target of 104.40. A close above it on medium term charts may lead to the stock testing its previous high at 126. Medium term trend however suggests that the rallies should be used to exit.

Elgie Equipments:

A bullish three inside up candlestick pattern was formed on Tuesday. This was followed by the resistance breakout on Wednesday. It has already tested the support and in all probability a rally can be expected. Technical target for the stock is 77.30. The long term trend is not encouraging due to the formation of a bearish engulfing pattern in the monthly charts.