Nifty is undergoing a period of consolidation following the sharp rally on Friday as it traded in a tight range for the third consecutive session. Yesterday’s trading was confined to the previous day’s range; however the index managed to close above the psychological 5300 barrier. The activity continued to be more pronounced in the broader markets that are playing catch-up to the frontline index which is taking a pause before resuming its journey northwards. Market breadth continues to be in favor of advances (A/D ratio of 2:1), and the volatility has dropped down near to the yearly lows at 18.27 on the India VIX indicating a benign risk environment. Momentum oscillators are bullish in the short-term, but are overbought in the immediate near-term indicating a phase of sideways correction to continue before moving higher. As per the overall structure we expect Nifty to test the 5440 levels before witnessing any meaningful correction and suggest maintaining a stop-loss of the 10-DEMA of 5213.
Trend among the sectoral indices was mixed as the high beta space was favored, whereas the defensives took a back seat. Metals (+2.12%), Realty (+1.91%) and Cap Goods (+0.63%) were the top gaining indices; and Oil & Gas (-0.56%), FMCG (-0.47%) and IT (-0.38%) indices underperformed. For the third day in a row, the broader indices managed to outperform the frontline peer with gains of 0.87% and 0.88% for the Mid-cap and Small-cap index respectively.
Bullish Setups: TATA, GSPL, ICICIBC, PWGR, DLFU, ADE
Bearish Setups: TTMT/A
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