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 hit oversold levels. This diminishes the odds for the index to decline further. This too suggests that a bounce back could be expected.

Outlook: The medium term chart of the Nifty has taken support at a perfect technical level. Indicators too are at oversold levels and do not suggest further bearish odds. We can expect the Nifty to make a short term bounce from current levels. It is a wait & watch as far as medium term trends are concerened.

Momentum gains upward bias: The medium / long term oscillator (Stochastics) has reached its oversold zone. Technically, this would mean that odds for a further downtrend have diminished in the index. Such a condition would ideally lead to a short term technical bounce without significantly changing the medium term character of the trend.

Outlook: While the medium term trend in the Midcap remains weak technicals suggest that a short term pull back rally is very likely to develop. The Mid cap index broke below the 7300 support level. But having reached oversold levels the chances for a bounce look bright. As for the medium term trend, we would prefer to be in wait & watch mode.