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Markets are poised for an upward swing

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Amid high volatility Indian markets have closed with loss of 1.34% for the week however, it was the gap up opening of Friday that managed to bring down 2.8% of losses for the week.

In the last two months, markets have been consolidating with so many gap-up and gap-down openings. There are sign of divergence in momentum oscillators, indicating we could see bottoming out around these levels.

Further, looking at charts of last few weeks, the 50-share Nifty index has to close above 4,950 lveel, otherwise it could see a further downside. The market have found support between 4700 and 4750 levels however, it is only stability above 4,950 which could once again raise hopes for bulls to enter the market.

On the long term charts 15,650 on the Sensex and 4,675 for the Nifty are very important levels to watch out for. Based on charts perspective these are the lowest levels since 2010 and have significant down side impact if it breaks.

The chart patterns, oscillators and short-term averages suggest that the indices are poised for an upward swing up to 5100. This looks difficult but, not impossible as bears could become uncomfortable above 4950.

I would like to reiterate that these tussles of bulls V/S bears is getting interesting and will only get over on a close below 4750 or above 5175. The sectors like realty, metals, IT and RIL could see a sharp rally in the swing expected on a close above 4950.

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Written by Rakesh Gandhi

October 10, 2011 at 2:18 pm