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| Indices likely to test June highs this week |
| B G Shirsat / Mumbai Jul 28, 2009, 00:07 IST |
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The Sensex and the Nifty closed the day today in a Doji pattern, indicating uncertainty among participants ahead of tomorrow’s credit policy. Doji pattern is made when stocks close around previous levels after a volatile session.
Doji pattern normally acts as a pause before a sharp swing. Both the benchmark indices corrected today after a strong opening as traders booked profits at higher levels. The market recovered from the day’s low, but Reliance Industries (RIL) and ICICI Bank, which closed in the red due to poor first quarter results, halted a full recovery.
However, the market continued to be in the grip of bulls and hence we might see some bounce-back tomorrow. The Nifty is expected to cross the 4,600-level as the July futures witnessed a modest unwinding of open interest (OI) while the August futures, which closed with a premium to the spot, saw a build-up of long positions all through the day. The OI in the August futures has increased by 1 million shares intraday to 8.35 million shares due to build-up of long positions.
According to a technical analyst at JM Financials, the technical set-up remains bullish and hence the benchmark indices may test the June 2009 highs of 15,600/4,690 this week. Some technical studies suggest that if the Sensex and the Nifty close above these levels, then the indices may gradually move towards 16,500/5,100 sometime in August 2009. The downside is now capped in the support zone of 14,800-15,000 (4,370-4,400 for the Nifty) and that could be used as a trailing stop for trading long positions.
The 4,700 strike call of the August series is showing a significant build-up, mostly of long positions.
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