Edelweiss Technical Reflection (ETR) March 4, 2011

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Edelweiss Technical Reflection (ETR)

§  Indian equity markets registered gains for the fourth day in a row and closed above 5500. Nifty is forming higher tops and bottoms since making a low of 5232 in the previous week. Yesterday’s session was fairly volatile as the index oscillated between 5500 for the entire day. The hourly and daily momentum oscillators are comfortably placed in the bullish territory, whereas the hourly moving averages are trading with a bullish crossover. Due to the intraday volatility, market breadth ended marginally in favour of the declines and the Nifty 50 stocks A/D ratio turned neutral at 1:1. The short-term uptrend in Nifty is likely to extend towards 5590-5600 where the 50-DEMA and 200-DEMA are likely to present stiff challenge. In case of a break of the barrier, a burst towards 5635-5650 is in the offing. On the downside the index is well supported at 5435 (50-HEMA) and 5400.

§  Trend among the sectoral indices was mixed. Cap Goods and Auto shares outperformed the market whereas Metals and Oil & Gas witnessed selling activity. BSE Realty index has made a higher top and bottom on the weekly chart suggesting first signs of reversal in the medium term. Bullish Setups: HDFC Bank (HDFCB), LT, Bank of India (BOI), RECL, Shriram Trans (SHTF), NagarCon (NJCC) Bearish Setups: Mundra Port (MSEZ), Educomp (EDSL), TV-18 (TLEI)

§  Gold has broken above the previous all-time high of $1430 well in an uptrend towards the $1550 mark. DXY continues to sink under selling pressure on target to test the strong 75.85 support. Crude Oil is consolidating around $102 (61.8% retracement of the 2008-09 bear market), and will eventually break higher towards $111-$120