Indian markets have begun trading in the new week on a negative by dropping off 0.75% and barely managed to hold above the 5100 mark.Earlier in the day, the index opened higher following media reports of the Govt. and Central Bank taking measures to curb the depreciating currency leading to a minor high above 5190 (printed in the previous week), however gains were unsustainable as the index tumbled on the announcements. There has been a breach of the hourly supports on the chart that could lead to further corrective price action in the coming sessions. Additionally, a 'bearish dark cloud cover' candlestick pattern has formed after a potential 'double top' at 5190 indicates the risk in the short-term in on the downside. Volumes were lower than average and the market breadth slipped in favour of declining stocks. India VIX climbed to 21.57 indicating protection buying for any declines. Momentum, although in favour of an upside in the short-term has rolled bearish on the hourly charts. We expect Nifty to slide down towards its 200-SDMA at 5075 and review the setup there. On the upside, 5194 (print high) is clearly a pivot onto which the bears are in a confident state.
All the sectoral indices ended lower on the back of strong profit taking. Among the notable losers of the day were Financials (-1%), Power (-1%) and Metals (-0.70%). Sectors where minor outperformance was seen were Consumer Goods (-0.13%) and Oil & Gas (-0.17%). The broader markets were rather mixed with marginal gains..
Bullish Setups: HUVR, HMCL, PWGR, DRRD, CAIRN
Bearish Setups: COAL, TCS, APNT, AXSB, DLF, HDFC
Regards,
Edelweiss Research
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