Nifty making a trend channel: The Nifty has made a trend channel since October 2009. After falling back into the channel, the Nifty reached its lower support level of 5200. This was as per our expectation. The Nifty has received support at the lower channel line and this can lead to a technical bounce back.

Short / medium term oscillator is oversold: The short/medium term oscillator (Stochastics) has moved up after it hit oversold levels. This minimises the possibility for the index to decline further at a quick pace. This behaviour of the index is likely to change soon and a sustainable bounce back could be expected.

Outlook: The medium term chart of the Nifty has taken support at a perfect technical level. With indicators reaching oversold levels odds for a further decline are very low. We can expect the Nifty to make a bounce from current levels. It is a wait and watch as far as the medium term trend is concerned.

Momentum gains upward bias: The medium / long term oscillator (ROC) has started to show a positive divergence. The index has made lower bottoms and lower tops in its daily chart. However, the corresponding levels in the ROC chart are showing equal bottoms and higher tops. This is indicating bearish fatigue and suggesting that the index may have bottomed.

Outlook: Both the medium term and short term trend in the Midcap remains neutral. But the daily charts are showing a positive divergence suggesting that the trend may have bottomed. Hence, bears need to be vigilant and cautious at this stage. While it is still a wait and watch for the bulls for some more time, the bias is shifting to the positive side. We expect positive developments in this chart over a period of time.