Despite the weakness among the Asian indices, Indian markets exhibited a strong rally following yesterday's down day, reclaiming the 5300 mark and ending the day at 3-month highs. Nifty opened with a minor gap up that provided the bulls enough fuel to carry first break back above 5300 and later surpass the previous week's high of 5333. Volumes remained at an average level and the breadth too returned in favor of advances with an A/D ratio of 1.8:1. The 10-DEMA bullish pivot of 5253 has been well respected resulting in a resumption of the short-term uptrend. Momentum oscillators that have completed the corrective cycle on hourly charts (MACD reverting from zero line), have rolled bullish. The daily oscillators too remain in bullish and trending mode. Nifty has even managed to close the 'bearish island gap'formed on 04-Apr-2012 at 5344, negating any bearish overhangs now. We maintain our target of 5440 and recommend trailing stops to 5270 (on closing basis).
Converse to yesterday's trend, all the sectoral indices ended the day higher led by gains in Cap Goods (+1.75%), FMCG (+1.75%) and Autos (+1.62%). The underperformers of the day were stocks from IT (+0.62%) and Healthcare (+0.85%) indices. The broader markets have taken a backseat as Mid-cap and Small-cap indices ended with gains of 1.10% and 0.81% respectively.
Bullish Setups: CNXBANK, AXSB, PWGR, BHEL, ITC, BHARTI, CRG
Bearish Setups: UNSP, JETIN, FB
Regards,
Edelweiss Research
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