Jun 212011

In yesterday's market action, India's Nifty breached an important trendline in a convincing fashion. All the corrections since Nov 2009 stopped right at this trend-line (see chart below) and kept the up trend intact.

Nifty breaches a 20 month trend-line

The weight behind this breach was ONGC, which also happened to complete a Head and Shoulders top on its weekly chart.

ONGC completes a head and shoulder pattern

Though Nifty is yet to break the February low of 5177, considering the fresh weakness in top four Nifty stocks (ONGC, Reliance, TCS, Infy), it looks like it would just be a matter of days before this level is violated. Relief rallies if any, are likely to come under pressure between 5400-5485.

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Jan 132011

The first one is the heavy weight ONGC

ONGC Daily Charts

IMO, this is not a perfect H&S top, as the volumes have not been supportive of the dip below the neckline. Nevertheless,  due to its high weightage in Nifty and fact that the stock is clocking lower highs and lower lows, it deserves our close attention.

Next is the cement major, ACC.

ACC Daily Charts

A close below the 1000 level with expanding volumes would give the bears the upper hand in this sector.

The third one is the real estate major DLF.

DLF Daily Charts

The stock is hanging by a fingernail above its major support of 255. Although DLF did dip below that level on an intraday basis, it managed to close above that level and averted a major disaster here.

If any of these stocks close below the levels marked here, the bears will have more ammunition to launch their assault on the broader market.