§ Nifty opened higher, nearly tested the 52 week high of 6075 and slipped down. For the rest of the day, Nifty continued to tread the lower path, breaking the crucial 5990 support. It has halted at the 50 hourly EMA at 5980, where there is a possibility of a reversal. Momentum oscillator MACD has completed the corrective cycle on the hourly charts at the zero line, against a bullish daily signal. Market breadth was in favor of declines for the second consecutive day as the damage was more in the broader market. Nifty breadth was also weak at 1:1.7. Nifty is now consolidating in a range as it has been unable to sustain above the 6000 mark on a closing basis yesterday. Important supports are now at 5950-5901. We expect the Nifty to hold above the 5950 support and trade within the 5950-6020 band. From a medium term perspective the up-trend remains intact for the target of 6350.
§ Market was dragged down by weakness in the Metals, FMCG and Consumer Durables sector. Whereas IT, Autos and Pharma provided some bullish support. Sterlite Inds was down 8.5% and is looking to re-test the range lows of 150. IT stocks have bounced smartly after a brief period of consolidation. That will be the pocket of strength in the coming sessions. RIL is trading at multiple supports point of 992-990, and if that is breached it will slide down to test 965. Bullish Setups: DLFU, NTPC, LITL, MM, KMB.
§ Most European indices ended the day on a flat note, but down from the day’s highs. These indices are unable to break convincingly above the short-term resistance, hence the recent short-term volatility. US markets are oscillating between the negative and positive territories as it awaits the close of the third quarter. US markets are likely to remain volatile for the next couple of days. For SPX 1130 is the key pivot for the ongoing bullish trend. Gold is gaining strength after breaking through the $1300 mark, with a sight of $1340 (30 month trend line resistance). Crude has broken off the moving average resistance to trade above $77. Short-term channel target of $80 is the much likely target. Euro is advancing on strong bullish momentum for the 61.8% retracement target of 1.39.
§ Interesting chart setups: DLF, LITL, KFA
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