Indian markets slipped lower in yesterday’s session to close a shade above 5100 before the crucial July series derivatives settlement, but have managed to hold the cluster of 50 and 200 day SMAs. Despite a marginally positive session the day before, Nifty slipped below the 5100 mark intraday in the first half threatening to dive lower; however it managed to recover in the second half on positive divergence developing on the hourly momentum oscillators. Volumes continue to be tepid ahead of the F&O settlement day; and the breadth ended strongly in favour of declines with an A/D ratio of 1:2. Technically, Nifty is taking support at the falling trend channel’s lower end, as well as the cluster of key MAs. Momentum oscillators are on the verge of completing a corrective cycle suggesting a pullback rally should ensue. Volatility, measured by the India VIX subsided down to 16.75 indicating a low-risk environment. We continue to maintain our immediate short-term view of a pullback rally towards the 5200 mark, risking the 5100 / 5094 area on a closing basis.
Most of the sectoral indices ended the day in the red with the exception of FMCG (+0.41%), IT (+0.28%) and Healthcare (+0.04%). Among the top losers were shares from Metals (-2.03%), Power (-1.41%) and Cap Goods (-0.91%) indices. Broader market Mid-cap and Small-cap index indicies fell by -0.76% and -0.79% respectively, underperforming the frontline benchmark.
Bullish Setups: Z, BHARTI, INFY, RIL
Bearish Setups: CNXBANK, ACEM, SBIN, TATA, JSP, BPCL
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Regards,
Edelweiss Research
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