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.