After Monday’s large down day, the indices exhibited a rebound rally that helped Nifty scale back above the 5100 mark. Overshadowing the daily close near the high of the day was the extreme volatility witnessed intraday with wild swings in either direction. Such a move is associated with rebound rallies within a downtrend and we are within a very near-term corrective phase. Nifty has moved back above the 21 and 50 hourly EMAs that will provide support till 5077. Volumes in yesterday’s session were marginally lower than average and the breadth was absolutely flat. Volatility dipped further down to 21.43 as compared to 22.66 on the India VIX.Momentum oscillators have been whipsawing along with the price on the daily chart but broadly remain in favour on an upside and underline the short-term bullish strength. We however continue to maintain our view of a 50% retracement of the two-week up move risking 5155 and targeting 4980.Only a sustained move above 5155 will negate our corrective bias and put the Nifty back in upward trending mode that could go on to test 5300 i.e. the 61.8% retracement of the Feb-Jun downmove.
Barring the mild weakness in IT index (-0.09%), all other sectoral indices ended the day in the green. Gains were led by stocks from Oil & Gas (+2.14%), FMCG (+1.58%) and Healthcare (+1.13%) indices. The broader market Mid-cap and Small-cap indices ended mixed with 0.17% and -0.01% respectively.
Bullish Setups: TATA, HUVR, BJAUT, PWGR
Bearish Setups: ONGC, DLF, HCLT, SESA
Regards,
Edelweiss Research
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