Edelweiss Technical Reflection (ETR) ; Feb 22, 12

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Edelweiss Technical Reflection (ETR)

§  Nifty made a smart comeback in yesterday’s session from the intraday lows to close firmly above the 5500 mark. In the initial part of trade Nifty gradually declined close to the 5400 level amid low volume and low volatility, but the final 90 mins of the session saw the index claw back the losses and trade significantly higher. Volumes in the previous session were lower than the 5-day average. Hourly MACD that had rolled bearish has turned up from the zero line, along with the bullish status of daily oscillators. Market breadth ended marginally in favour of the declines but improved from the early trade. Nifty 50 stocks A/D was robust at 2:1. With yesterday’s recovery, Nifty has closed back above the 21-DEMA regaining the short-term bullish bias. It is forming a potential ‘inverted head & shoulder’ (bullish) pattern with neckline at 5620 with target in the range of 5685/5850. Although in the immediate near term we expect the index to consolidate between 5600-5400 before a convincing break above 5620.

§  Barring the Auto index all other sectoral indices ended in the green. Technology, Consumer Durables and Oil & Gas stocks attracted strong buying interest. Bank Nifty has closed above 11,000 and is on the verge of triggering a buy signal on the daily chart. Bank stocks will likely lead the index higher in the coming sessions. BSE Oil & Gas index needs to cross above 9593 to trigger a buy signal based on higher highs and higher lows on the weekly chart. Bullish Setups: Reliance (RIL), SBI, HDFC Bank (HDFCBK), Sterlite (STLT), WIPROBearish Setups: Sintex (SINT), Tata Motors (TTMT), RCOM, PFC (POWF).

§  European equities have turned sharply lower on scorching Crude Oil price. Momentum oscillators have rolled bearish and a sustained down move is likely in the next one month. USD-INR is heading down to the 44.85 support after falling sharply from 45.88 levels. Silver is trading at 30-yr highs at $34. A close above will take it to the record high $41.50.