Visit http://indiaer.blogspot.com/ for complete details § After a good start to the day and a follow up buying from the day before, Nifty went into a tailspin and ended the day at the lowest point. Nifty has now retraced 50% of the fall from 6284 to 5985 at 6127, and resumed the next leg lower. With the break of the low of 5985 (Bullish Hammer day), the selling is expected to accelerate since most momentum oscillators are pointing lower on the daily chart. Overall market breadth turned in favor of bears in the second half. Nifty stocks’ breadth was adverse at 1:2.5. Nifty has made a ‘bearish engulfing’ candlestick pattern with relatively high volumes suggesting an immediate short-term down move on the cards. The up move from 5350-6284 is getting retraced and is expected to trade down to 5840 (50 DEMA). It is advisable to book profit on long positions and initiate trading shorts on the index and single stock futures.
§ The index slipped down on selling pressure in IT, Realty and Telecom stocks. Pharma, and Auto shares bucked the trend. Select banking and metal counters are showing signs of imminent weakness and can drop by 5-7% in the near term. Bullish Setups: GAIL, IBREL, TTMT, SUEL, RIL, PLNG. Bearish Setups: AXSB, BPCL, BHARTI, LICHF, JSTL.
§ Following the policy action from the Chinese central bank, the European and US markets turned down from weekly highs. The underline price action and momentum setup remains positive on these indices and declines should be limited. The recent currency gyrations have reached a point of reversal with the EUR-USD, AUD-USD and USD-INR pairs at potential turning points from overbought levels and the DXY too at a reversal from 76 mark. Gold has dropped sharply from near record levels with a potential medium term top being formed at $1387 with a sell signal on oscillators. Downside target is pegged at $1260.
§ Interesting chart setups: RIL, GAIL, SUEL, AXSB, LICHF
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