Jan 23: Edelweiss Technical Reflection (ETR)

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Edelweiss Technical Reflection (ETR)

Indian equities registered yet another positive session with the Nifty surging in the final half hour to close with gains of 0.60% at 5048. The index traded in a narrow range of 28 points in the first half of the session, but started losing traction and dropped close to 5000 only to rally and recover 60 points off the day’s low. Nifty has close near the high of the day forming a ‘hanging man’ candle pattern. As per the candle pattern, if the index opens down sustains and lower in the next session, it confirms a temporary top. For the week though Nifty has managed yet another stellar performance; its third consecutive since the start of the New Year. The weekly setup has improved significantly with a buy crossover on the MACD along with positive divergence and the Nifty climbing above the crucial 200 week SMA. Coming back to the daily charts, the previous session witnessed high turnover and an adverse market breadth indicating profit taking by most traders before important events in the coming week. Short-term oscillators have reached an overbought state and the prices have reached a critical resistance cluster of 5070 / 5100, thus it is advisable to be cautions on long positions and is recommended to exit in case of break of intraday support of 5000.

Trend among the sectoral indices was mixed with the high beta space gaining bullish traction and the defensive stocks taking a back seat. The late rally was led by Banking (+3.51%), Power (+1.04%) and Oil & Gas (+1.04%) shares. FMCG (-2%) and Healthcare (-0.37%) saw some selling pressure. The outperformance of the broader markets appears to be fading down as the Mid-cap and Small-cap indices closed flat with 0.18% and 0.08% gains respectively.

Bullish Setups: RIL, HMCL, DRRD, HDFCB, JUBI

Bearish Setups: INFY, IGL, BJAUT