Edelweiss Technical Reflection (ETR) Feb 28, 11

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Edelweiss Technical Reflection (ETR)

§  Positive global cues helped Nifty stage a relief rally on Friday after previous day’s carnage on the street. The index however made a lower low before recovering and closing in the green. A‘bullish harami’ candlestick pattern has formed on the daily chart indicating a potential short-term reversal. Hourly momentum oscillators have rolled bullish which could help the pullback rally. The daily oscillators are showing mixed signals. Market breadth ended in favour of the declines, but improved from the previous session’s extreme reading. Nifty 50 stocks A/D ratio ended marginally better at 1.5:1. Nifty has held on to the 5200 mark with a smart recovery ahead of the Union Budget suggesting an attempt to push higher towards the 10-DEMA at 5400. The short-term down trend will be violated if the index manages to close the bearish gapat 5427.

§  Trend among sectoral indices was mixed as FMCG and Banking stocks witnessed good buying interest, whereas Technology and Cap Goods shares declined on further selling. India VIX has entered a trending phase on close above 28, suggesting a phase of heightened volatility in the coming weeks.

§  Bullish Setups: Kotak Bank (KMB), Suzlon (SUEL), RECL, Sesa Goa (SESA), Pantaloon Retail (PF)

§  Bearish Setups: HUL (HUVR), GAIL, Jindal SAW (JSAW), IndusInd Bank (IIB)

§  US and European equity indices have ended the three week advance with a sharp downtick. The short-term trend for these markets has turned lower on adverse price and momentum setup. Rallies will likely face strong selling in the coming week. Meanwhile commodities like Crude Oil, Gold & Silver trend higher and are likely to continue the uptrend in the medium term. DXY is approaching critical support of 76.60 from where a sustained pullback is expected.