Edelweiss, Indecision After Fall

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Markets exhibited some indecision on Friday after two sessions of steep decline as the Nifty ended with a marginal gain of 0.33% at 8200. The day began on a weak note followed by lackluster range-bound activity and recovered in the final couple of hours. Volumes were anemic on back of year-end lull and the market breadth was marginally in favor of advancers. After retracing 50% of the pullback from 7961 to 8364, Nifty has formed a ‘spinning top’ candlestick pattern indicating indecision from market participants. Nifty continues to close below its 12, 20 and 50 DMAs, thus indicating underlying weakness. Fear gauge (India VIX) subsided down to 14.65% as the immediate near-term risk profile is likely to be subdued. Short-term momentum oscillators are now trading in neutral zone, thus suggesting lackluster price action. Hourly MACD is near zero line strength in today’s session could turn the needle in favor of bulls. We prefer to maintain a short-term bullish stance as long as 8100 remains inviolate expecting a re-test of all-time highs above 8600 and extend further towards 8800.

Trend among sectoral indices was mixed with gains posted in Realty (+0.93%), IT (+0.85%) and Metals (+0.58%) indexes; whereas losses were seen in FMCG (-0.81%), Power (-0.16%) and Auto (-0.04%) indices. Broader market Mid-cap and Small-cap ended with gains of +0.41% and +0.02% respectively.

LINK
https://www.edelweiss.in/research/Indecision-After-Fall/27915.html