Edelweiss Technical Reflection (ETR) § 6 April 2011

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Edelweiss Technical Reflection (ETR)

§  After opening with a gap up, the index quickly slid into negative territory and came off ~1.2% from the days high. However in the second half the index took support at the 21 hourly EMA and recovered to close marginally in the green. With that it has formed a ‘hanging man’ candlestick which is a sign of imminent correction. The efficacy of the candlestick pattern is high as it is formed after a substantial rally, as well as at an important trend line resistance. The confirmation for the same will be on break of yesterday’s low of 5855. Momentum oscillators are showing overbought readings with negative divergence on hourly charts. Market breadth cooled off from previous day’s high reading albeit favoring the advances. We remain of the opinion that the rally from 5350 lows is now maturing at multiple resistances between 5900-5940 from where Nifty should be constricted to sideways price action or retrace down to 5800 initially and possibly at the 38.2% fibo level of 5700. In the event of a close above 5940, Nifty can further extend the rally towards 6100. But this remains a low probability case under current technical setup.

§  The Midcap and Small cap indices outperformed their larger peers for the second day in a row. Stocks from Metals and Realty sectors were the major gainers, whereas larger Oil & Gas, FMCG and Banking sectors ended up in the red.

§  Bullish Setups: Tata Steel, BHEL, Ranbaxy (RBXY), SAIL, Renuka Sugars (SHRS)

§  Bearish Setups: Asian Paints (AP), HUL, TPWR, YES

§  US and European equity indices have been flattish for the past two sessions as they consolidate just under their highs for the year. Oscillators are pointing for a break higher which could begin a fresh round of rally for the developed world. Gold has broken past the previous highs to trade above $1450. The technical structure points to a test of $1500-1500 in the medium term.

Regards,