22 Nov -Edelweiss Technical Reflection (ETR)

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Edelweiss Technical Reflection (ETR)

It was terrible day for the Indian equity markets as the benchmark index fell incessantly by 2.60% to end its 8^thconsecutive daily loss. The week started off with a gap down opening and gradually slipped lower as the selling intensified in the final couple of hours. Nifty has closed below both 4900 and 4800 levels creating a panic situation which can trigger further sell-off towards the yearly low of 4720 and possibly break lower. Daily candlestick pattern of an opening marubozu with a large body indicates the intensity of the fall. The previous day’s ‘hammer’ candlestick pattern has been invalidated on the break of lows. Failure of a pattern results in a strong move in the opposite direction which is what was witnessed yesterday. Market breadth has been extremely poor with an A/D ratio of 1:3 indicative of the broader market rout. While the downward momentum has been quite strong and tending, it is also important to note that oscillators have reached oversold levels and the hourly setups have started showing positive divergence which can at any time trigger a sharp retracement. Below the yearly low of 4720, the index will find support at the 2010 low of 4675 (February 2010). Medium-term structure has evidently been damaged in the past eight sessions as the break of short-term supports is only a matter of time before Nifty continues its 12-month southward journey making lower lows and highs.

All the sectoral indices ended the day in the red. Among the prominent losers were Metals (-3.46%), Banking (-3.24%) and Realty (-3%) indices. FMCG and Healthcare indices outperformed the market with loss of 0.82% and 1.07% respectively. Mid-cap and Small-cap indices too managed to outperform its frontline peers with 1.86% and 1.68% cuts respectively.