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Weekly Index Outlook 
Sensex (8966.7) The strong rally that made Sensex surge past 8500 in the previous week petered off around 9000. Indian stocks jived to overseas cues in the absence of any market-moving development in the country. The week was marked by inexplicable rallies in some of the beaten-down stocks in the mid and small-cap segments.
Volumes were high in both cash and derivative segment as the desire to buy 'close to the bottom', lured both investors and traders in to the markets. FIIs were net buyers in cash last week though the net outflow for March remains at $320 million. The expiry of the March contracts in the derivative segment will dominate the trading next week. Since short positions are piling higher by the day, the current rally can get a leg-up if the short-sellers are forced to square their positions.
Sensex struggled to move above the 9000-mark in the last three sessions. However there has not been a sharp sell-off from this resistance either. The three stars formed in the second half of the week in the daily candlestick chart aptly reflect the tug-of-war that is currently on between the bulls and bears. Daily momentum indicators are moving sideways just above the neutral zone while weekly indicators continue in the negative zone. The implication is that the short-term outlook is indecisive while the medium-term view continues to be negative.
We had indicated in this column last week that the rally cannot be taken seriously unless Sensex moves above 9200. There is no alteration in this view. The 50-day simple moving average present here coupled with key Fibonacci retracement resistance makes it a resistance that is not easy to overcome. If Sensex manages to rally above this level, the rally could extend to the band between 9800 and 9900 over the medium term. It may be recalled that the medium-term range for the index is between 8000 and 11000. On the other hand, inability to climb above 9200 would imply that bears continue to have the upper hand and they can yet engineer a decline to 8000 or below.
In short, we continue our vigil at the 9200 mark this week as well. If the correction continues, the supports will be at 8710 and 8456. Short-term investors can hold their long positions as long as the index stays above the first support. Resistances for the week would be at 9120 and then 9530.
Nifty (2807) 
Nifty struggled with the psychological resistance at 2800 last week; reversing from an intra-week peak at 2836. But the correction so far has been extremely mild and the index has been meandering in a narrow band between 2770 and 2820 in the last two sessions. Traders need to exercise caution until the index records a strong move above 2800. For a reversal from here will cause a medium term decline to 2570 or lower. Short-term supports for the index are at 2720 and 2660. Stop-loss for long positions ought to be at 2700.
A strong move above 2800, on the other hand, will take the index to 2946 or 3054 in the near-term. Fresh long positions should therefore be initiated only on a strong move beyond 2820. It however needs to be remembered that a run-away rally is not likely in the Nifty yet since the medium-term ceiling for the index could be at 3000 or 3200.
Global Cues It was a less exuberant show by global equities though most indices managed to hold on to the gains recorded in the previous week. Dow Jones Industrial Average stuttered at the first resistance around 7500. The November 2008 trough at 7506 and the 50-day moving average present at the same level makes it a key hurdle from a long-term perspective as well. The magnitude of the current pull-back will give us clues to help us gauge if a sustainable low is in place for the Dow. Short-term support to watch is at 6850. Interestingly, the S&P 500 is well above the November 2008 trough at 741. A decline below this level will be a victory for the bears. Commodity prices soared higher on Thursday as the dollar fell off the pedestal. CRB index traded on NYFE closed with a weekly gain of 5 per cent. —
Strong & Weak futures
This is list of 10 strong futures:BRFL, Bata India, Ster, Finan Tech, KPIT, Hind Zinc, Matrix Labs, Hindalco, GMR Infra & JP Associates. And this is list of 10 Weak Futures: Alok Text, Rolta, Indian Bank, Ranbaxy, Hind Petro, Triveni, BPCL, Allahabad Bank, Moser Baer & Yes Bank. Nifty is in Up Trend.FII DATA| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) |
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 20-Mar-2009 | 1108.73 | 1257.91 | -149.18 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) |
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 20-Mar-2009 | 600.9 | 694.93 | -94.03 |
Infosys 
This stock hovered uneasily around the key resistance at Rs 1,300 last week. As indicated in our last column, Infosys has strong resistance around Rs 1,300 and a downward reversal from here can pull the stock down to Rs 1,220 or Rs 1,160. Conversely, a close above Rs 1,320 will take the stock to the next medium-term target at Rs 1,457. Short-term traders should therefore wait for a close above Rs 1,320 before initiating fresh long positions.
The area between Rs 1,450 and Rs 1,500 is the key medium-term resistance zone for Infosys. The November peak at Rs 1,457 and the 200-day moving average at the same level make it a strong obstacle. The medium-term range for Infosys stays between Rs 1,000 and Rs 1,500.
ONGC
ONGC struggled with the resistance at Rs 736 in the first four sessions of the week but the strong rally on Friday has taken it beyond this hurdle. Targets for the move from the March 6 trough are Rs 750 and Rs 818. Since the November peak was also at Rs 810, this level is the next target for the stock. However, short-term investors should book partial profits around this level. Supports for the week ahead are at Rs 690 and Rs 645.
The resistance at Rs 800 is also very important from a medium-term perspective since the medium-term range for the stock is between Rs 600 and Rs 800. A firm close above Rs 800 will make the medium-term view positive and pave the way for a rally to Rs 867 or Rs 950.
Maruti Suzuki
Maruti Suzuki moved sideways with a positive bias between Rs 690 and Rs 735 last week.
The doji formation in the weekly chart however denotes indecision and that the bulls and bears are evenly matched at these levels. As indicated last week, if the stock manages to hold above Rs 700, it can rally to the zone between Rs 750 and Rs 777.
The area around Rs 750 is also a key resistance from a medium-term perspective. If this level is crossed, subsequent targets are Rs 850 and Rs 950.
Conversely, downward reversal from here can pull the stock to Rs 500 again. Investors with a short-term horizon should therefore book partial profit around Rs 750.
SBI
SBI could not move beyond the resistance at Rs 1,000 and declined from an intra-week peak at Rs 998 instead.
The short-term view will turn positive only if the stock records a strong close above Rs 1,000.
Else, it will move in the range between Rs 900 and Rs 1,000 for a few weeks. Short-term supports are at Rs 936 and Rs 890. Short-term traders can continue to sell on rallies with a stop at Rs 1,000.
The medium-term outlook for SBI is negative since it is currently trading below the long-term support at Rs 1,000.
Failure to move above this level over the next two weeks will imply an impending decline to Rs 790 or Rs 750 over the medium-term.
Tata Steel
Tata Steel reversed lower from an intra week peak at Rs 181. As explained last week, there is a short-term resistance band between Rs 184 and Rs 190. If the stock is unable to move past this band next week, it will imply that the near-term view is negative and a move lower to Rs 161 or Rs 146 can follow. Short-term traders can initiate fresh shorts on a downward reversal from this resistance band with a stop at Rs 192.
The medium-term trend in the stock continues to be sideways in the band between Rs 150 and Rs 250. The stock needs to record a strong close above Rs 190 to indicate that it is heading towards the upper boundary of the medium-term range at Rs 250.
Reliance
Reliance Industries moved past the resistance at Rs 1,300 to record an intra-week peak at Rs 1,354.
The stock has been vacillating between Rs 1,100 and Rs 1,400 since November 2008 while it is forming a symmetrical triangle. If the up-move since March 6 is part of this pattern, it can reverse lower from the band between Rs 1,370 and Rs 1,400 again and move lower to Rs 1,100. Rally beyond Rs 1,400 will give the next medium-term target at Rs 1,500.
Three consecutive stars in the daily candlestick chart imply that the stock is facing resistance around Rs 1,350. Fresh longs are advised only above Rs 1,400. Supports for the week would be at Rs 1,270 and Rs 1,250.
NIFTY & SENSEX SPOT LEVELS FOR 23rd March
 | 2807.05 | ( 0.00 %) | -0.10 |  |
| | 1 | 2 | 3 |
| Resistance | 2824.22 | 2841.38 | 2866.67 |
| Support | 2781.77 | 2756.48 | 2739.32 |
 | 8966.68 | ( -0.39 %) | -35.07 | |
| | 1 | 2 | 3 |
| Resistance | 9022.06 | 9077.45 | 9154.91 |
| Support | 8889.21 | 8811.75 | 8756.36 |
Nifty future may see downward drift
Nifty future managed to sustain its momentum of last week as it managed to close around the 2800-mark.
It ended the week at 2798 points, registering a gain of 2.8 per cent over its previous week's close.
But contrary to the premium (over the spot) at which it closed last week, it closed the week gone by at a slight discount to the Nifty spot.
The Nifty spot closed at 2808 points. This relative poor show by Nifty future, particularly during the later part of week may be attributed to the lack of follow-up buying.
Rollover of positions however has been quite healthy this time around.
For that matter, the rollovers started earlier this time than what has been the case in the last three-four months.
Nifty rollover was pegged at about 34 per cent and was mostly on the long side.
As for individual stocks, it was stocks in the metal pack such as Hindalco, Sesa Goa, SAIL and Tata Steel that saw a sharp accumulation in next month series.
Follow-up
We had advised traders to consider short straddle using 2700-strike. Considering the opening (on Monday) and closing (on Friday) prices, the strategy has ended on a slightly negative note.
Outlook
The Nifty future appears critically placed now. As has been written earlier, it faces a strong resistance at 2850-2875 levels, breaching which its next resistance is placed at 2950-2975 levels. On the other hand, if Nifty futures weakens from the current level, it is likely to find support at 2750 first and then 2680 levels. That said, we expect the Nifty future to open on a calm note on Monday and weaken going forward. Any excessive selling in the market may also take the Nifty future to 2550 though in between it has support at 2750 and 2680.
Option monitor
Options' trading presents a positive bias for the market. The April 2800, 3000 and 2900 calls were the most active and saw accumulation in long open positions last week.
Among the puts, 2600, 2700 and 2800 in April series were the most active, but they added short positions, indicating that Nifty could face strong support at every dip.
Volatility Index
India VIX or Volatility Index, which measures the immediate expected volatility, weakened further to 34.86 (35.57) - the second lowest level since January 23, 2009. This fall points at a positive bias for the market, indicating that a significant plunge in Nifty future may be rather remote.
Recommendations
For the coming week, we suggest traders the following strategy.
Consider going short on Nifty future if the market opens on a calm note on Monday. You can then keep a stop-loss at 2850; but remember to adjust the stop-loss progressively. If Nifty future fails to pierce 2750, it has the potential to bounce back to 2950. So, this strategy is only for traders who can stomach high risk. Besides, since the coming week is also the settlement week for the current month derivative contract, traders may also have to brace themselves for heightened volatility in the market.
FII trends
The cumulative FII positions as a percentage of the total gross market position on the derivative segment as on March 19, declined to 35.68 per cent. They were predominantly net buyers in the F&O segment last week. They now hold index futures worth about Rs 8,239 crore (about Rs 7,710 crore) and stock futures worth about Rs 14,108 crore (about Rs 12,701 crore). Their index options jumped to about Rs 25,066 crore (about Rs 21,033 crore).
Star candlestick patterns
Star patterns in Japanese candlesticks are single-candle formation that look like the twinkling stars that we all are familiar with. Stars have small real bodies and they gap away from the previous candlesticks. In other words, the star candlestick's real-body does not overlap that of the previous candlestick. This gives rise to the illusion that these small-bodied candles are floating in the sky.
The candlestick stars can be either white (bullish) or black (bearish) in colour. Stars taken in isolation do not have too great a significance. They imply indecisiveness; that the investors are beginning to doubt the strength of the prevailing trend. A long white or dark-bodied candlestick typically occurs before the star candlestick. These stars combine with other candles to form various candlestick patterns such as morning star, evening star, doji star and shooting star. A look at the morning and evening star candlestick patterns.
Morning star: This is a three-candle reversal setup. Morning star is a bottom reversal pattern, bullish in nature. The pattern occurs after at the end of the downtrend. The first candle is a long dark real-body and the second is the star signalling uncertainty. The third candle is a real white one that covers at least half of the first candle. These three candles do not overlap on each other. Refer to the daily chart of GVK Power and Infrastructure for morning star candlestick pattern. From Rs 21, the stock tumbled to Rs 12. After a long dark candlestick around this level, the stock gaps down shaping a star. The bulls take control later on and the stock reverses direction. The uptrend of the stock continues to Rs 25.
Evening star: It is a top reversal three candle pattern, which is a bearish reversal. This pattern happens after a continued uptrend. The first candle is long white real-body and the second is the star, indicating indecisiveness. While the third candle is a real dark candle that eats al least half of the first candlestick. The three candles do not overlap on each other. Infosys illustrates evening star candlestick pattern.
Following an upmove from Rs 1,300 to Rs 2,000 (from March to June 2008), the stock formed an evening star candlestick pattern. One can observe that after a long white candlestick, the stock gapped up next session forming a small real-body (star). Subsequently, the stock changed its trend, completing the evening star pattern.
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Arvind Parekh
Phone:+91 98432 32381
Latest version of PIB is now available for download on http://power.indiabulls.com/Click on the following link http://power.indiabulls.com/mib/MIB_BB.jar to download Mobile PowerIndiabulls software for your mobile to view mkts on move.
