Daily Call - Apr 5 2010

Benchmark indices managed to close in green for the eighth consecutive week on the back of smart recovery on the last trading session of the truncated trading week. On the first session of the week Nifty gained 0.4% but the RSI failed to make a new top, reconfirming the negative divergence. Following two sessions were marked by correction which took the benchmark around 1% lower from Monday’s close. But a smart rally of 0.8% on Thursday made the Nifty close higher by 0.16% on weekly basis.


The cautious view on the market continues as the negative divergence is still in place. Nifty is likely to face a stiff resistance around 5330, the top made on Monday. On the downside, 5235, the low made on Wednesday, is now a crucial support, a breach of which can take the benchmark to around 5170, where a trend line adjoining bottoms of 8th and 25th Feb presents a support. Traders need to be nimble footed and keep a strict stop loss of 5235 in long positions. Only a decisive close above 5330 along with the support of RSI will make the view turn bullish. Meanwhile, concentrate on mid-cap and Small-cap stocks which were underperformers in the earlier rally and might chart their own course.