It was a relatively quiet day for the markets as Nifty tried to stabilize above its 200 DMA. But, the disquiet and nervousness was still visible as far as stock and sector specific moves were concerned. So, while IT held the Nifty to neutral territory, metals, Realty and Capital Goods stocks were weak. L&T numbers were not liked by the street as stock continued its southwards journey. Stock is now below Rs 1700. ADAG stocks responded negatively to the SEBI ruling as all the group stocks took a knock. R-Infra was down almost 8% and is now trading consistently below the May’2009 levels. There was no respite for realty and infra stocks. So, while Nifty managed to close without any damage, majority of the actively traded stocks were not as lucky. TCS came out with better that expected numbers after the market hours and might trigger some short covering in broad market. But, still the trend remains tricky and its likely that we might slip below the 200 DMA and 5600. The current weakness seems to be more on account of bull liquidation than pure short covering and that could largely explain any strong short covering rebounds so far. Market and some of its heavyweights continue to trade in oversold zone and still not much of positive divergence in momentum indicators is visible in these charts. So, charts are not showing any signs of bottoming out and any technical rebounds could prove to be short-lived and would find resistance at even slightly higher levels. Nifty’s rebound could falter around 5730-40. Most of the better results are also not finding favors with marketmen as was witnessed in Indusind and to a lesser extent in Axis Bank. Axis could rebound to around Rs 1250/Rs 1285. Overall, there is not enough technical evidence to suggest that the pain could be over.
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