6 March: Edelweiss Technical Reflection (ETR)

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Edelweiss Technical Reflection (ETR)

The markets ended the first day of the week on an extremely bearish note as the Nifty dropped 1.47% to close below 5300. After opening with a minor gap down, the index continued to decline as the weak trend across Global indices helped sellers add pressure and sustain lower levels. The index is now 1.5% away from an important support of 5200 (re-test of the 14-month channel and the 50 day EMA is placed), along with the 200 DMA slightly lower at 5166. Volumes in yesterday’s session were extremely low, whereas the market breadth was strongly in favour of declines. Momentum oscillators on the daily chart have rolled and indicate further downside risk in the immediate near-term. With the markets in a short-term downtrend and approaching critical supports, it is be advisable to buy the declines at 5200-5165 for a resumption of the intermediate uptrend that began since the onset of the New Year.

Barring the outperformance in the defensive FMCG index (+0.26%), all other sectoral indices ended the day in the red. The biggest knock was taken by Realty (-3.26%), Metals (-3.06%) and Banking (-2.62%) shares. Amongst the broader markets, the Mid-cap and Small-cap indexes fared marginally better that their frontline peer with losses of -1.39% and -0.95% respectively.

Bullish Setups: PWGR, HPCL, CIPLA, CNXBANK, SHRS

Bearish Setups: MSIL, JPA, BJAUT