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§ The index traded in a strong positive session for the third consecutive day, making higher high and higher low. It has managed to close above the ascending trend line from 4786 low which was broken down in the previous week. Index has retraced 38.2% of the recent fall and is likely to do 50% retracement at 6015. Bullish trigger on daily RSI and Stochastics is helping the index gain upside momentum. Volumes in the past two days have been above average. Market breadth continues to be strongly in favor of advances. Nifty 50 stocks A/D ratio was robust at 4:1. Since Nifty has managed to trade past 5935 with ease, the next significant resistance cluster is between 6000-6035 that will challenge the strongest of bulls in the coming sessions. Only a close above 6000 will turn the short-term trend higher, until then the bearish overhang continues. From a trading perspective, one should look to initiate speculative short trades near index 6000 levels with a reversal above 6035 (daily closing basis).
§ Major sectoral indices witnessed a positive trend yesterday. Metals, PSU and Realty stocks shared the honors. IT and FMCG shares witnessed least buying interest. Auto and Pharma indices have given a breakout above small consolidation flag patterns with the potential to outperform the market in the near term. Bullish Setups: BHARTI, DRRD, CIPLA, GAIL, HH, SAIL, NDEN Bearish Setups: RELI, ACC, BHEL.
§ European equity indices bounced back strongly yesterday, but the rally seems suspect under a short-term bearish structure. USD-EUR is witnessing a technical pullback from 1.29 levels after an extremely oversold condition. The Euro is expected to drop towards 1.28 in a choppy trend over the course of few weeks. We maintain our bullish bias on Crude Oil for a re-test of $88, and possibly a break above $90 in the coming weeks.
§ Interesting chart setups: BHARTI, GAIL, HH, ACC, RELI
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