The domestic stock markets opened lower mirroring negative global cues but recovered from lows due to short covering and selective buying support. The Nifty breached but then closed above the psychologically important 5000 level for the fourth day, which is seen as a positive sign. Market breadth was positive amidst higher volumes. Technical indicators point to further buying support but some negatives could lead to intermittent selling pressure. Key support and resistance levels for the Nifty are noted. Short term trading ideas based on technical analysis are also provided.

1. Daily Technical Outlook
7th September 2011
Indices Close % Chg. Mirroring the negative global market cues, the domestic
BSE SENSEX 16862.81 0.89 markets witnessed a gap down opening. Sustained selling
S&P CNX NIFTY 5064.30 0.94 pressure continued on the bourses as the Nifty breached the
NIFTY SEP. FUT. 5061.10 1.00 5000 level. However, short covering and selective buying
India VIX 28.66 2.98
support helped the markets bounce back from the lows for
the day. Buying momentum gained once Nifty crossed the
S&P CNX NIFTY Technical Levels 5000 level, which also triggered short covering. The markets
Level 1 Level 2 Level 3
managed to hold on to the gains. The markets ended the day
with modest gains to close near the highs for the day. The top
Support 4987 4757 4563
gainers for the day were Ambuja Cements, Reliance, M&M,
Resistance 5161 5200 5325
SAIL, JP Ass., HCL Tech., BHEL, GAIL and Jindal Steel.
Volume (Lacs Shares) Technically, the market breadth remained positive amidst
06/09/11 05/09/11 % Chg. higher volumes, which is a positive sign for the markets.
BSE 2952 2434 21.28 The global market set of cues are mix. The domestic
NSE 7124 6445 10.53 markets are likely to witness a positive opening. Negative
Total 10076 8879 13.48 global cues and Stochastic being placed in the over
Source – BSE & NSE bought zone led to profit taking. The Nifty has managed
to close above the psychologically important 5000 level
Turnover ( ` Crores)
for four trading days, which is a positive sign and augurs
06/09/11 05/09/11 % Chg.
well for the markets. The MACD, RSI and KST are placed
BSE 3082.24 2549.87 20.88 above their respective averages, which would lead to
NSE 12884.20 11341.54 13.60 further buying support. The –DI line has come below the
NSE F&O 109932.97 82058.49 33.97 30 level, while the +DI line continues to move higher.
Total 125899.41 95949.90 31.21 However, a few technical negatives continue to hold
Source – BSE & NSE good and would lead to intermediate bouts of selling
Market Breadth (NSE)
pressure and profit taking. The Stochastic is placed in
the over bought zone on the daily charts and has slipped
Advances 894
below its average. The KST and MACD are placed in the
Declines 562
negative. The Nifty continues to trade below its 200-day
Same 60 SMA. Further the 50-day SMA remains placed below the
Total 1516 100-day SMA. Now, it is important that the Nifty
A/D Ratio 1.59 : 1 continues to sustain above the 5000 level for it to move
Source – NSE higher to test the 5150-5200 resistance band. It is equally
Moving Averages S&P CNX NIFTY important that follow up buying support materializes at
50 Day SMA 5341.05
higher levels. In the meanwhile the markets would take
◄Negative cues from the global markets. The support levels for Nifty
100 Day SMA 5445.51
are placed at 4987, 4757 and 4563. The Nifty faces
200 Day SMA 5577.11 ◄Negative
resistance at the 5161, 5200 and 5325 levels.
Intra-day Resistance Intra-day Support
Indices Close Pivot Point R1 R2 R3 S1 S2 S3
BSE SENSEX 16863 16749 17009 17155 17561 16602 16342 15936
S&P CNX NIFTY 5064 5027 5111 5157 5287 4981 4897 4767
NIFTY SEP. FUT. 5061 5022 5112 5162 5302 4971 4881 4741
Sanjay Bhatia (AVP – Technicals), Email Id sanjay@keynotecapitals.net Yahoo Chat Id: keytechnicals@yahoo.in
Keynote Capitals Ltd.
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4 Floor, Balmer Lawrie Bldg., 5, J. N. Heredia Marg, Ballard Estate, Fort, Mumbai, India – 400001. Tel: 3026 6000 / 2269 4322
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2. Short Term Trading Ideas Based On Technical Analysis (5 - 7 Days)
Stop
Initiation Stop Loss Target
Stock Close Action Price Loss * (%) Target (%) Remarks
Bharat Forge 292.95 Buy Above 294.50 290.00 1.53 304 3.23
GAIL 427.25 Buy Above 430.00 418.00 2.79 455 5.81
Lupin 483.80 Buy Above 488.00 473.50 2.97 520 6.56
M&M 797.30 Buy Above 801.00 788.00 1.62 830 3.62
* Stop Losses are to be considered on Closing basis only.
Keynote Capitals Ltd.
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4 Floor, Balmer Lawrie Bldg., 5, J. N. Heredia Marg, Ballard Estate, Fort, Mumbai, India – 400001. Tel: 3026 6000 / 2269 4322
www.keynotecapitals.com

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