Markets traded with a negative undertone yesterday dragged down by weak global cues and uncertain domestic political climate. Nifty opened down with a gap, but managed to maintain the low of the day, just above the‘bullish gap’ threshold of 5527. The index traded in a 47 points range throughout the day as it found difficult to break through the 21-hourly EMA of 5567. Volumes were relatively lower and the breadth was weak with an A/D ratio of 1:2 indicating broader market profit sales. Volatility is consistently on the rise with India VIX climbing upto 18.62 and the ST trend turning bullish there. Momentum that had turned overbought in the immediate near-term is turning neutral, offering breathing space to resume the advance. Hourly MACD is close to completing its corrective cycle at the zero line. As a result, Nifty could trade down to the supports of 5527 / 5485, but should be bought into with a trailing stop-loss of 5447. We expect Nifty to test the upper boundary of the four-month upward trending channel at 5735. On a closing above 5577, Nifty will close in the green for the third consecutive week indicating a continuation of the ST uptrend.
Barring the gains in IT (+0.84%) and FMCG (+0.15%) indices, all other sectoral indices ended the day lower. Among the prominent losing sectors of the day were Metals (-2.28%), Cap Goods (-1.94%) and Power (-1.63%). Broader market indices too had a bad day with losses of 0.65% for the Mid-cap index and 0.53% for the Small-cap index.
Bullish Setups: INFO, POWF, DLFU, HUVR, BHEL, SHRS
Bearish Setups: CAIR, STER, COAL
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