Edelweiss Technical Reflection (ETR) - March 22, 2011

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Edelweiss Technical Reflection (ETR)

§  Nifty began the week’s proceedings on a lackluster note after opening with a gap up and immediately giving up the gains. For the day Nifty remained in a range of 50 points, and finally closed with a loss of 0.2%. It has tested the minor falling trend channel support from where a rebound is possible. Oscillators on the other hand have rolled bearish on short-term charts posing downside risks to the market. Trading volumes continue to stay anemic for the last couple of weeks underlining the directionless nature of market. Breadth remained in favour of declining stocks for the second day. Nifty 50 stocks A/D ratio ended neutral at 1:1. The sideways trend of the market is expected to continue further until a decisive break out of the 5300-5500 range is achieved. From an immediate short-term trading perspective it is advisable to build long positions on supports at 5315 for a test of hourly MAs at 5450. A forceful break below 5300 will result in downside price and momentum acceleration.

§  The sideways action for the day was depicted by mixed trends in sectoral indices. Realty and IT stocks were the major losers; whereas Pharma and Banking witnessed tepid buying interest. CNX IT index has triggered a break of a ‘head & shoulder’ top pattern indicating downside risk towards 6400 / 6200.

§  Bullish Setups: Voltas (VOLT), Ambuja Cem (ACEM), HOEC, Videocon (VCLF)

§  Bearish Setups: HUL (HUVR), CNXIT, Hindalco (HNDL), Jet Airways (JETIN)

§  Western world equity indices continue the rebound for a third session against a bearish momentum setup. Gains are likely to be short lived and should be best sold into. WTI Crude Oil is on its course to test $111. Currency markets are once again on the move as the EUR-USD approaches its most crucial challenge at 1.435 in the current uptrend.