Weekly Nifty For 24th June to 28th June 2013

                 Bears drew bulls blood across the street. The mayhem was not as much with indices as it was with the underlying stocks. The markets fell sharply across globe, indicating bears pondering the markets hard. The RBI monetary policy mid-quarter review was essentially a non-event. In line with market expectations the governor kept key policy rates unchanged, sighting the sharpe rupee depreciation. The nifty fell 141 points on weekly basis, which is around 2.5% but the mainstream stocks were hammered anywhere between 5-15%.

                  Nifty has formed a big black body candle on weekly charts, indicating the bearishness. The bullish island reversal formed on last weeks' daily charts, provided some help this week. The index went up to 61.8% of the fall from 5962 to 5683, but from there on it was a single way slide to 5618. For three days the markets were in the range of 5770-5860, essentially trading flat for the week. The real hit came after the FOMC meet, which only hinted future partial roll back of Quantitative Easing (QE). The nervous markets gave away their gains globally on this news. 

                Nifty now trades below all its averages, the long term 200DMA (5812), medium term 50DMA (5919) & short term 20DMA (5847) indicating that the uptrend has reversed on all time frames. The confirmation of trend reversal will come when nifty fills the gap at 5447-5526. Nifty is near its support of 5644, which a trendline drawn from the lows of 4770 and 5477. The entire move from 4531 to 6229 has been corrective in nature and has formed a rising wedge like pattern. This pattern has bearish implications. In Friday's Nifty Daily I had written that

" I expect nifty to take a breather, either it will consolidate near support and then move up OR it will move up and then consolidate. It might also be possible that we will see levels of 5610 intraday and then pull back to close within the wedge. "

                      The markets tested 5610 and bounced sharply, but were sold of again at resistance of 5683. The markets refused to even enter the previous day's trading range, which is a sign of concern. The government inaction to take key decisions is adversely affecting the market sentiments. The big selling by FII in both cash and futures markets has become more prominent. The 5644 support will hold as long as there is some break in the FII selling. FII sold 4893.45 Cr. in cash market and 2341.26 Cr. in Index futures. FII have bought 2569.13 Cr. Stock futures.

                        MACD and ROC are both negative and continue in Sell mode. RSI (35) too continues in Sell mode suggesting a continuation of bearish momentum. Stochastic Oscillator continues in Sell mode as %K (18) is below %D. MFI continues to fall and is well below the equilibrium line at 20, suggesting money continues to flow out. ADX has reduced to a level of 23, suggesting the current trend has almost all of its strength. The Directional Indicators continue with their Sell signal as –DI continues to stay above +DI. OBV too continues with its Sell signal. Bollinger Band also continues with its Sell signal given two weeks back. Thus majority of the Oscillators points toward continuation of bearishness in the short term.

                       The Nifty O.I. PCR has further reduced to 0.81, which is near it's oversold levels. For the current series, highest Open interest build up is seen at 5800 Call and 5600 Put. This suggests that the market will trade in the range of 5600 and 5800 levels. Lot of Put writing was seen at the strike of 5600 on Friday, which suggests immediate support to come in at that level.

                         I expect the support of 5610-5580 to hold for some time. Nifty can give a bounce to the levels of 5755-5777, which is a bearish falling gap. This gap can be tested before nifty begins its downward journey. A break below 5600 will essentially mean that the selling is not over and lower supports can be tested.The support for nifty is at 5580-5530-5450 and the resistance is at 5700-5760-5830. 

Trading Idea for 24th June- 28th June 2013

Script	BUY/SELL	Pattern	cmp	target/s	Stoploss
ACC	sell	Channel break down	1163.6	1152/1141/1125	1179
axisbank	buy	bullish piercing	1259.7	1272/1283/1315	1245
bajaj-auto	buy	weekly channel break	1830.05	1854/1874/1934	1810
hinduni	sell	weekly bearish engulfing	590.65	587.55/583.4/581	594.25
maruti	buy	bullish harami	1554.65	1580/1610	1525