Edelweiss Technical Reflection (ETR) March 24, 2011

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Edelweiss Technical Reflection (ETR)

§  The Indian benchmark index traded with a strong positive bias building on to the previous day’s gains. Intraday charts have improved significantly as the index breached past the hourly 21 and 50 MAs, and momentum oscillators roll bullish. Additionally Nifty has closed above the 5450 resistance which now becomes a strong support for the coming sessions. The daily momentum indicator behavior threatening to signal a bullish breakout as the MACD turns whipsaws back with a buy crossover. Trading volumes improved over the 5-day average. Market breadth was remained steadily in favour of advancing stocks. Nifty 50 stocks A/D ratio was extremely strong at 9:1, indicative of the blue-chip bias. The immediate near-term outlook has turned positive after yesterday’s move as the index is expected to rally upto the 50-DEMA at 5540 which has proved to be a real test. A daily close above will result in Nifty stretching its legs upto the 200-DMA at 5690.

§  A positive trend was witnessed in all the sectoral indices yesterday. Interest rate sensitives Realty and Banking remained the most favoured, closely followed by Healthcare and Metals. Autos and IT stocks remained rather subdued. Bank Nifty has triggered a bullish breakout of the declining trend from November peak with the momentum also rolling bullish. Follow up buying will lead the index to test 11300 initially and 11700 thereafter.

§  Bullish Setups: ICICIB, Voltas (VOLT), Ambuja Cem (ACEM), REC, JP Assoc (JPA)

§   Bearish Setups: CNXIT, Maruti (MSIL), HPCL, Wipro (WPRO)