8 Feb: Edelweiss Technical Reflection (ETR)

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Nifty ended the series five-straight sessions of gains as it dropped 0.49% to close below 5400 signaling a potential short-term trend reversal. After opening in the green and above the 5400 mark, the index started to slip lower to close the gap and trade sideways for most past of the day. However the final couple of hours saw the index breakdown to make an intraday low of 5323 after taking support of the 21 hourly EMA. Nifty has formed a ‘bearish engulfing’ candlestick pattern (bearish reversal) that will require follow through selling to validate the pattern. It has nearly retraced 50% of the down move from 6338 to 4530 and thus some moderation in prices is on the cards. The momentum oscillators continue to trade in an overbought state, whereas the hourly oscillators have rolled bearish indicating downside pressure. Trading volumes remain at a higher level and the market breadth slipped down with an A/D of 1:2. On sustenance of trade below 5300, the Nifty will likely push lower towards the important support of 5220.

Most of the sectors ended the day in the red led by selling in Cap Goods (-2.29%), Realty (-2.10%) and Power (-1.98%). Among the sectors witnessing buying interest were Oil & Gas (+0.98%), Banking (+0.56%) and FMCG (+0.28%). The broader market, Mid-cap index lost 0.81% and Small-cap index lost 0.44%; underperforming their frontline peers.

Bullish Setups: PFC, STLT, ONGC, IBREL, ACEM, PF

Bearish Setups: HUVR