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Edelweiss Technical Reflection (ETR)
§ The index dropped sharply in an extremely volatile session, breaking below the crucial 5690 support and closing lower. Nifty has even breached the channel support line where it had bounced off in November. The index has also decisively closed below the 50SDMA and 100SDMA reinforcing the bearish trend. Momentum oscillators continue to point lower, whereas the hourly oscillators are showing signs of positive divergence signaling a pullback rally is in the offing. Market breadth was strongly in favor of declining stocks. Nifty 50 stocks A/D ratio was weak at 1:4.5. Nifty is now only 50 points above the important 200 SDMA at 5605 which will act as the final line of defense of the recent decline. This also coincides with the rising trend line from July 2009, thus making it a strong support. Incase of a breach of this support, Nifty is likely to drop sharply lower towards the 5400 mark. On the flipside, any rallies are likely to find selling pressure at 5775.
§ All sectoral indices ended in the red on the back of broad based selling. Interest rate sensitives like Realty, Banking and Autos declined by ~2%. Metals too witnessed a sharp sell-off. IT and Healthcare shares prevented large damage. Reiterate the uptrend in India VIX for the target of 25.35.
Bullish Setups: HZ, IH, BHARTI, CAIR, GRASIM
Bearish Setups: SAIL, CNXBANK, HPCL, AXSB, DLF.
§ Global equity indices continue to maintain strong footing, closing near the week’s high. DJIA is approaching a resistance pocket at 11850, and SPX at the target of 1310. EUR on a close above 1.341 will trigger a breakout for 1.37 price objective.
§ Interesting chart setups: HZ, BHARTI, CAIR, MSIL, BJAUT,
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