The final session of the previous week closed flat with marginal gains but not before some volatile price action. It was a ‘tale of two halves’ as the first half saw the index kiss the 5400 mark and suggest it would decisively move higher, however that was not to be as lack of fresh triggered and opportunity to book profits helped Nifty dive ~60 points from the top, down to the 50-hourly EMA support of 5340 and finally recouping the losses to settle even. The series of ‘Higher lows and Higher Highs’ is clearly in place and only the resistance from the major trend line connecting previous range peaks needs to be broken out on a closing basis to indicate an acceleration of price action and shift of the trading range higher. Volumes were relatively better, and the breadth improved with an A/D ratio of 1.2:1. There has been a loss of momentum in the past week as most oscillators turn flat with constrained price action, and is only likely to pick up on break of the range. Nifty has managed to crawl towards its third consecutive positive week, reinforcing the bullish weekly setup. We expect the price action in the immediate near-term to continue being choppy between 5400 and 5300, and wait for a decisive break higher to load fresh longs for targets of 5650 / 5750.
Secotral trend was mixed in the final session of the week with gains coming from FMCG (+1.26%), IT (+1.15%) and Healthcare (+0.67%) indices. Among the top losing sectors were Realty (-1.71%), Power (-1.59%) and Metals (-1.49%). The underperformance of the broader markets continues to be apparent as the Mid-cap and Small-cap indices ended absolutely flat at 0.05% and 0.02% respectively.
Bullish Setups: INFO, RIL, ACC, PWGR, ADSEZ, GAIL
Bearish Setups: TATA, IDEA, BPCL, HMCL
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