Indian markets managed to outperform their Asian peers that were down >2% by closing with a marginal gain. After opening with a gap down, the index broke below the three week low of 4788 and started to recover and at the end manage to close the earlier bearish gap and close in the green. The smart recovery in yesterday’s session has mitigated immediate downside risks and could possibly extend higher towards the resistance level of 4900. Volumes were at an average and the market breadth although in favour of declines improved substantially from an earlier weak reading. Volatility, tracked by the India VIX dived below 26 after an intraday spike utpo 29 indicates a temporary reversal. Nifty has taken support near the lower boundary of a downward sloping trend channel of 4745 and with daily MACD trading with a buy crossover we could see a gradual recovery towards 4900 and potentially get into a small trading range as well. Fresh downside will come only on break of 4745 which could risk taking the index towards 4645 (minor bullish gap of January 2012).
Trend among the sectoral indices was mixed as gains were witnessed in high beta Cap Goods (+2%), Realty (+1.35%) and Oil & Gas (+1.17%) indices, whereas cuts were seen in stocks from FMCG (-1.5%), Metals (-0.60%) and Healthcare (-0.54%) indexes. The Mid-cap and Small-cap indices underperformed the frontline index with losses of 0.21% and 0.23% respectively.
Bullish Setups: LT, HPCL, BPCL, DLF
Bearish Setups: DRRD, LICHF, BHEL, APNT, CAIR
Regards,
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