24 Nov -Edelweiss Technical Reflection (ETR)

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Edelweiss Technical Reflection (ETR)

After a day’s rest, the bears are back on the prowl with a serve 2.20% cut in the index yesterday. The markets continued to slip lower since opening gap down with a sharp fall in the middle of the day that broke below the yearly low of 4720 as well as the year 2010 low of 4675 to make an intraday low of 4641. Some recovery was seen in the final couple of hours but was not enough for the markets to close at a new two year low. The weakness in Indian markets is in sync with the breakdowns in the western world equities but with a higher impact. The ‘inside bar / harami’ pattern broke lower, hence the sharp selling. The daily candle chart shows a bearish candle with long lower shadow suggesting buying support at lower levels. Market internals indicate marginally higher turnover and an A/D ratio of 1:3.8. Nifty breadth was extremely poor at 2:48 indicating a blue-chip meltdown.The coming session is likely to be volatile on the back of November series derivatives settlement where Nifty can trade in a range of 4780-4600. After break of 4675 support the next support for comes in at 4540 where the markets can stabilize for a sustained recovery.

For a day like yesterday, all the sectoral indices closed in the red. The biggest cut was seen in Cap Goods index (-3%) followed by steep fall in IT (-2.48%), Oil & Gas and Banking (-2.41% each) indices. Healthcare index managed to outperform with <1% decline. Mid-cap and Small-cap indices too dropped lower by 2% and 1.7% respectively.

Bullish Setups: HH, HDFC,

Bearish Setups: HCLT, LPC, TTAN, MM, HDFCB