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§ Nifty fell for the third consecutive day breaking below the 5800 mark and even closing below it. The market is witnessing a similar pattern in the past three days of last hour selling suggesting a strong bear grip. A lower top lower bottom formation on the daily chart also suggests the same. Momentum oscillators are comfortably in sell mode, although the hourly oscillators have again reached oversold zone with positive divergence, posing a risk of a sharp technical pullback in the near term. Market breadth has been the troubling sign as it continues to be strongly in favour of declines. Nifty 50 stocks breadth was again at an adverse 1:5. The index has come in striking distance of the re-test of the trend channel breakout at 5750 that also coincides with the 38.2% retracement of the rally from 4786 to 6338, which will proved enough support for a substantial pullback in the immediate short-term. Rallies towards 5900 seem to be capped since breaking down rising trend line from 4786 low.
§ Realty stocks continue to bleed, and yesterday seems to be the climax as the Realty index was down 5.4%. Among top losers were the Cap Goods and Metals shares. IT, Telecom and Auto shares have been outperforming the market lately.
Bullish Setups: BHARTI, DRRD, GAIL, HH, APTY
Bearish Setups: IOC, BHEL, RELI, TTAN
§ The DXY is approaching the 80.65 (200 DEMA) which is likely to halt the rally in the short-term. The index is however slated to close the week in the positive and above the falling trendline, which is a bullish sign in the medium-term. We maintain the USD-INR outlook to test 46.05 in the near term from where strong supply is expected.
§ Interesting chart setups: BHARTI, GAIL, CIPLA, IOC, RELI
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