Following the ‘bearish harami’ candlestick on Wednesday, the warning was already sounded for a reversal, and indeed the markets dropped down in yesterday’s session. Nifty opened with a huge gap down in reaction to the disappointing Infosys 1Q results, breaking below the 10-DEMA support of 5277 and maintaining trade below that. This has triggered our short-term reversal pivot and we now expect the bears to take the driver’s seat. Volumes were slightly better as compared to the previous session and the breadth was strongly in favour of declines with an A/D ratio of 1:2. An uptick was also witnessed in the volatility index VIX that climbed to 18.71 indicating initial signs of protection buying. Momentum oscillator had already rolled bearish on the hourly chart have now turned negative. Short-term targets take our attention to the 200 day SMA of 5100 where there are few swing lows from previous-months congestion zone.
Barring the gains in Realty (+0.94%) and Oil & Gas (+0.27%) sectors, all the other sectoral indices witnesses price cuts. The worst affected for the day was IT (-5.1%), Cap Goods (-1.45%) and Autos (-1.15%) sectors. The broader markets on t he other hand have managed to outperform their frontline peers with minor losses of 0.59% for the Mid-cap index and 0.66% for the Small-cap index.
Bullish Setups: CNXBANK, SBIN, BHEL, ITC, HMCL
Bearish Setups: TTMT/A, JETIN, WPRO, JSP
Regards,
Edelweiss Research
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