Edelweiss Technical Reflection (ETR) : March 9

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Edelweiss Technical Reflection (ETR)

It was an extremely volatile session on the bourses as the benchmark index Nifty gyrated in a range of 175 points for the entire day and finally ending the day 1.10% lower at 5222. The index opened on a weak note, following the negative trend across Asian markets, but soon started to recover sharply as it breached above previous couple of sessions’ highs and nearly tested 5400, cheering the outcome of the State elections. However, the euphoria was short-lived as higher levels attracted strong selling and the Nifty spiraled lower to close near the low of the day. Nifty has taken support of the 14-month trend channel re-test level coinciding with the 50 day EMA at 5215, and is near to testing its 200 DMA broken earlier. Trading volumes picked up and the market breadth ended strongly in favour of declines with an A/D ratio of 1:2.5. As indicated earlier momentum indicators on the daily chart have rolled bearish; but the Stochastic Oscillator has turned oversold and showing positive divergence signal suggesting a reversal in imminent. We maintain our stance of buy the declines to 5200-5165 as the Nifty is approaching critical supports, thereby offering a low risk entry point. Reversal should be placed at 5095 levels.
Sectoral trends were mostly in favour of the downside as he high beta Metals (-3.88%), Power (-2.38%) and Cap Goods (-1.94%) shares suffered the most. On the gainers list were FMCG (0.79%) and IT (+0.52%) stocks. Mid-cap and Small-cap indexes had a similar fate as their frontline peer, dropping 1.11% and 1.29% respectively.


Bullish Setups: PWGR, HPCL, CIPLA, CNXBANK, SHRS
Bearish Setups: MSIL, JPA, BJAUT, JSP