Indian markets have had a terrible start to the week with the benchmark indices dropping ~1.65% and are trading at important pivot points. The day began on a negative note as the Nifty opened with a huge gap down owing to the weak global cues and sold off throughout the day to nearly test the 200-SDMA at 5100. The markets lacked volumes yesterday; however the breadth was adverse with an A/D ratio of 1:3 suggesting a broader market rout. Volatility shot up as the India VIX climbed upto 18.66 from 16.89 clearly indicating a ‘risk off’environment. Momentum continues to be in favour of bears, however the hourly indicators are trading in an oversold state, hence a pullback rally off the supports is a high possibility. Nifty has made an ‘island cluster’ leaving behind a minor bearish gap between 5169 and 5162 which if not closed can result in a severe sell-off. Due to the low volume environment, we expect the support cluster between 5095/5100 to hold up, resulting in a pullback rally upto 5200 in the short-term.
Not surprisingly, all the sectoral indices ended the day in the red. Among the top losing sectors were Metals (-3.35%), Realty (-2.87%) and Power (-2.70%). Marginal outperformance was seen in shares from Healthcare (-0.31%) and Oil & Gas (-0.92%) indices. Even the broader markets sold-off with loss of 1.31% for the Mid-cap index and -1.14% for the Small-cap index.
Bullish Setups: Z, COAL, BHARTI, INFY, RIL
Bearish Setups: CNXBANK, ACEM, SBIN, TTMT, MSIL
Regards,
Edelweiss Research
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