Edelwesiss Technical Reflection- 18.3.11

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Edelweiss Technical Reflection (ETR)

§  Nifty suffered a setback in yesterday’s session owing to the weak global cues, and selling post the RBI Credit Policy announcement. The index is finding it difficult to trade past the 50-DEMA which is offering continuous supply for the past two weeks. At the close, Nifty was down 1.17% after taking support from the crucial intraday support of 5435. Momentum oscillators on daily and hourly chart are whipsawing for the past two weeks unable to give a clear direction to the market. Market breadth dropped back in favour of declining stocks, but the recent trends in A/D ratio do not indicate any market direction. Nifty 50 stocks A/D ratio was slipped down to 1:2. We continue to maintain our bias of a choppy trade within the range of 5400-5600. From a trading perspective one can look to buy the declines to 5400 with reversal below 5375.

§  Yesterdays weakness was board based leading to decline in most of the sectoral indices. Defensive FMCG and IT shares led the decline, whereas Power and Consumer Durables bucked the downward bias. BSE Metals index is 2.75% above its bullish pivot of 14850. It will be interesting to watch the index trade near the level for a substantial move.

§  Bullish Setups: CIPLA, RCOM, Voltas (VOLT), IDFC, Ambuja Cem (ACEM), EKC

§  Bearish Setups: HUL (HUVR), Jain Irri (JI), Zee Ent (Z), Jindal Steel (JSP)

§  Western equity indices pulled back the losses of the previous day; however they continue to remain vulnerable to further declines on the back of trend violation and bearish momentum. As per expectations Crude Oil has bounced back from the crucial $96.75 support to trade above $102. The medium term technical setup points to a test of $111.