Edelweiss Technical Reflection (ETR) : 24 May: Edelweiss

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Edelweiss Technical Reflection (ETR)

After Tuesday’s large drop from the highs, the benchmark index traded in a narrow range albeit with a negative bias. Owing to the weakness across Asian markets, Nifty opened with a minor gap down and made an intraday low of 4803 in the first half and managed to recover back to close the gap down. However lack of strength from the bulls resulted in a sideways trade thereafter, resulting in a ‘doji’ candlestick pattern on the daily chart. Volumes continue to clock on at the lower range and the breadth remains in favour of declines. Volatility has shop upto 27.13 from 24.39 a day earlier as per the India VIX indicating a fearful phase for the markets. With momentum oscillators maintain their sell stance, the downside risk in the immediate-term has increased that could end up breaking below previous week’s low of 4789 and drop down to December 2011 low of 4530. Meanwhile the upside is capped at the 50 hourly EMA of 4895.

Most of the sectoral indices ended the day in the green. The biggest knock was taken by stocks from Cap Goods (-0.89%), Realty (-0.86%) and Metals (-0.72%) indexes. The gainers of the day were IT (+0.16%), and Healthcare (+0.15%) indexes. Mid-cap and Small-cap indices ended in line with its frontline peer with loss of 0.41% and 0.58% respectively.

Bullish Setups: ICICIBC, DLF, RBXY, BOB

Bearish Setups: DRRD, LICHF, IDFC, MM