Edelweiss Technical Reflection (ETR) 3 Feb 2011

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Edelweiss Technical Reflection (ETR)

§   Index bucked the five session falling spree with a small gain in a range bound trading session. After the opening gap higher that was maintained through afternoon, but the penultimate hour witnessed sharp selling that dragged it below 5450. Nifty was unable to cross above the 21 hourly EMA which is now acting as a strong resistance for the market. Daily RSI (28) and Stochastics continue to show oversold readings indicating a technical pullback in the near term. Market breadth improved marginally in favour of advances; the Nifty 50 stocks A/D ratio was neutral at 1:1. The market has short-term upside risk that can last upto the 200-SDMA at 5600 from where fresh selling is likely to occur.

§   Sectoral trends were mixed on the back of relief rallies across various counters. The badly battered Realty sector gained the most (2.4%) followed by Oil & Gas and Technology. Power and Cap Goods shares belonged to the losing side. BSE Realty index has made a ‘bullish harami’ candlestick pattern on oversold conditions indicating a sideways to bullish trend in the coming sessions. Bullish Setups: FORH, SHRS, TATA, TCS, IDFC Bearish Setups: TTMT, ACEM, JETIN, RPWR

§   Trend among western equity indices is weakening on loss of momentum. EUR has rallied above 1.38 mark and looks good to test the three year declining trendline resistance at 1.44. USD-INR faces resistance at the two year declining trend channel at 46 that can drag it below 44.50 in the near-term.

§   Interesting chart setups: TATA, DIVI, HH, ACEM, TTMT