Traders to now shift focus to quarterly earnings - Angel Broking

Sensex (19784) / Nifty (6016)

The week began on a quiet note as traders chose to remain cautious before the announcement of the 'Fiscal Cliff' deal in the US. However, on Tuesday our benchmark indices, the Sensex and the Nifty, opened higher as the US market surged substantially after the US legislators kicked the can down the road and temporarily averted the 'Fiscal Cliff'.

On Wednesday, the Nifty managed to traverse its near term barrier of 5950, as mentioned in our previous reports. The following trading sessions of the week were quiet but meanwhile the Nifty managed to convincingly cross and close above the psychological level of 6000. During the week, the Realty, Oil & Gas, PSU and Consumer Durables sectors outperformed our benchmark indices; whereas FMCG is the only sector to remain in the negative territory. The Sensex and the Nifty ended the week with a decent gain of 1.74% and 1.82%, respectively.

Quite similar to last year, this year too, the first week resulted in positive gains as the Nifty witnessed a weekly closing above the 6000 mark for the first time after December 31, 2010. The benchmark indices have now managed to cross their near term hurdles of 19613 (Sensex) and 5965 (Nifty). At this juncture, we are observing that these are facing a resistance near the 'Upward Sloping Trend Line' (drawn by joining the highs of October 5, 2012 and December 11, 2012). Also, the daily chart now depicts two consecutive candles which resemble a 'Hanging Man'. As mentioned in our Friday's daily report, the said pattern has a negative implication and needs a confirmation in the form of prices closing below the low of the pattern. Considering the overall positive sentiment across the globe and bullish higher degree charts, we don't expect a complete reversal of the existing bull trend, although a minor corrective move cannot be ruled out. Hence, a closing below 19679 / 5981 would confirm the 'Hanging Man' pattern and indices may slide towards 19624 - 19509 / 5960 - 5935. Any sustainable move beyond 19798 / 6021 would negate the pattern and the indices then may rally towards 19950 / 6070. Traders should consider reducing long positions and partial profit booking in individual large cap counters near to the 6070 - 6125 mark.

Source : Equity Bulls

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