Friday may see continuation of up-move at least in the initial trade; temporary bottom seems in place

Friday may see continuation of up-move at least in the initial trade; temporary bottom seems in place

Along with significant improvement in the market breadth, the Markets recovered over 120-points from the low point on Wednesday and ended the day with a decent gain. The Wednesday’s session saw a range bound and subdued trade in the first half of the session but the last two and half hours of trade saw the breadth improving and short covering was witnessed from lower levels. The NIFTY saw a over 120-point spurt and ended the day gaining 82.40 points or 0.73%.

We will enter Friday’s trade after a gap of one day. Thursday was a trading holiday because of Ganesh Chaturthi. While we approach next session of the trade, there are two factors that are working in the favor of the domestic Markets for the day. One, we do not have any apparent negative cues to deal with and secondly; the buoyant Asian Markets. Unless we have fresh overnight negativity to deal with, this may lead to a positive start to the trade on Friday.

While we expect a follow through up-move to continue at least in the initial trade, the levels of 11410 and 11465 will act as immediate resistance levels. Supports will come in at 11250 and 11210 zones.

The Relative Strength Index – RSI on the Daily Chart is 45.4649 and it is neutral showing no divergence against the price. The Daily MACD stays bearish while trading below its signal line. On the Candles, a long-lower-shadow occurred. This is typically a bullish signal if it occurs after any downtrend.

The pattern analysis shows that after running away much ahead of its curve following a breakout, the NIFTY has reverted to its mean. It has currently managed to hang on to its 50-DMA support and the upward rising trend line support that follows soon after that.

Overall, we are most likely to see a positive opening and some follow-up up move in the initial trade. However, the broader range of the Markets is still likely to remain intact and it would be important to continue protecting profits at higher levels. Unless a current bottom is established in the immediate short term, all up moves should be utilized to protect profits while all corrective downsides should be utilized to make value purchases. With the primary uptrend remaining intact, cautiously positive approach is advised for the day.

STOCKS TO WATCH:

Short covering was seen in stocks like South Bank, Idea, State Bank of India, ITC, Titan, Sun Pharma, HDFC, UPL, Hindalco, SAIL, Power Grid, Federal Bank and Tata Global.


Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst
Member:
 (MTA, USA / CSTA, Canada / STA, UK)  | (Research Analyst, SEBI Reg. No. INH000003341)
Tel: +91-70164 32277  | www.EquityResearch.asia | milan.vaishnav@equityresearch.asia

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