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 expectations. 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 diminishes the odds for the index to decline further at a quick pace. The index has moved sideways albeit with high volatility. This tendency is likely to carry into the next week.

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 expect the markets to trade sideways for some time with high volatility. It is a wait and watch situation as the index is not gaining any directional thrust as yet.

Momentum gains upward bias: The medium / long term oscillator (Stochastics) has reached its oversold zone. It has also started moving above its trigger line. This is an encouraging development. The index is likley to consolidate for some time but may soon gain a positive bias.

Outlook: While the medium term trend in the Midcap remains weak, short term technicals are beginning to gain strength. A pull back move could be round the corner. As for the medium term trend, we would prefer to be in a wait & watch mode.