Nifty- Bullish Times Ahead

[insight]

Recovery To Continue

After a long dull period of trading the markets witnessed some
volatility last Friday on account of the widely followed event.
Our expectation of a bullish outcome played out well as the
Nifty hit the 5000 mark but got back below the 4930-4950
resistance area on a closing basis. Technically, the move
above 4900 itself qualifies as a mini breakout an effect of which
should be seen in the near term. We have a few fresh positive
signals in the form of a breakout from a large pattern, breach of
the averages, oversold scenario of the weekly indicators/
oscillators and strong sector-specific charts that should lead to
further recovery and take the indices close to the Jan ‘10 highs.
The indices should see a confident close above the
16600/4950 level this week, which would then bring back the
bull market trading momentum. Near term support seen at
16100/4800 while the bigger picture base remains at
15300/4700 and only on a close below the same does the
medium-term uptrend get cancelled. The Banking, Metals,
Capital Goods and IT sectors are likely to outperform. The Midcap
and Small-cap indices are currently at crucial support
levels from where a rebound is likely. The Dollar Index seems
to forming a top around the 81 level.

Patterns – Bottoming Pattern Develops

The indices have broken out of a large bottoming pattern in the
form of an “Inverse Head And Shoulders” that has been in the
making for the last few weeks. The target for the same is
around 5170/17300 that should ideally be achieved this month.
The supporting neckline of the formation stands at 16300/4880,
which should be held for the bullish scenario to remain.

ICICI Bank – Best In Its League

The stock has the best technical set-up in the Banking space
having the potential to rally 20-25% over the medium-term. In
the near term, the move last Friday has strengthened the setup
for a rally towards 950.

IDFC – Insurance With High Returns

The stock has broken out of a downward sloping “Channel”
pattern within which it has been trading for the last three
months. The same is likely to trigger a move towards 175/191.