It's not been a good start to the trading week with bears pressing sales led by weakness across the Asian indices. Nifty opened with a gap down below 5300, but managed to recover towards the psychological barrier and started to sell-off once again, breaking below the hourly 21 and 50 EMAs of 5068 and 5073 respectively. The earlier negative divergence readings on hourly momentum oscillators resulted in ~1.4% drop from the high of 5333. Short-term oscillators have rolled bearish but remain in positive territory indicating a correction within an up cycle. Breadth turned strongly in favor of bears with an A/D ratio of 1:2.3. Nifty is now delicately poised at the pivot point of 5248, the break of which would signal a deeper retracement towards the 5160 (bullish gap area). We prefer to maintain our bullish bias for target of 5440.
All the sectoral indices ended the day lower led by losses in Metals (-1.55%), Power (-1.54%) and Cap Goods (-1.25%). Only the Technology sector managed to outperform with minor loss of 0.07%. Weakness was more pronounced in the broader market Mid-cap and Small-cap index with losses of 1.20% and 1.06% respectively.
Bullish Setups: GUJS, ICICIBC, PWG R, BHEL, ITC, BHARTI
Bearish Setups: TTMT/A, JETIN
Regards,
Edelweiss Research
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