Technically Speaking…

Lots of people do chart gazing to ‘predict’ the future course of the index. We feel that Technical analysis is supportive along with fundamental analysis. Without fundamentals, technical cannot stand up and talk.

In the current context Our Observations are:

Coming to the current Nifty movement, NSE (Nifty) after a downspell for a period of 10 months from Jan 2008 has maintained a sideways trading for a period of 5 months (up to March 2009) between the levels of 2500 to 3100. ( See Chart -1)

Having decisively broken the 50 Days Exponential Moving Average (EMA) : 2851 and 100 Days EMA : 2999, market is poised to rally till 3400 on the NSE and 11240 on the BSE.
The RSI (Relative Strength Indicator) clearly points out to a emerging buying interest in stocks on delivery basis. (RSI Chart)
Our Understanding on the charts are:

Investors need to be cautious and should not buy at higher levels. Only if nifty crosses these levels and close, we can be sure of further rally.

Till such time, investors need to book profits at higher levels and stay in cash to buy once markets dip.

But the downtrend is arrested. A bottom has been formed. And it is likely Nifty may not touch the previous bottom of 2200.

In future, market may hover around 2600 to 3400 for sometime, before climbing up the hill.

Above all, this is the right time to pickup fundamental stocks for long term when ever markets correct. There is no need to worry of further impending crash. ( Refer RSI Chart)

Note: Technicals hold good only till the fundamental news ( about stock or economy) hold good. If Fundamental detoriate, then technicalls may mislead you.