IT basket soars after weakening of rupee, 10500 remains a strong hurdle: Angel Broking

Daily Market Wrap Up by Mr. Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking):

"It was a day of consolidation for our markets as we saw index gyrating within a small range throughout the session. A gap up opening was merely a formality, which was hinted by an 'Open High'. The Nifty slipped towards yesterday's low in initial half an hour of the trade. This was then followed by a lackluster movement with a gradual recovery towards the 10400 mark.

With today's action, we do not see any major change in the price structure. Who knows, this might be the lull before the storm. Considering the expiry factor, such range bound day was quite evident as we can see Nifty getting stuck in a small band of 200 points i.e. 10500 - 10300. Hence, we did not see any directional move with a conviction during the day. However, we can now see an addition of yet another indicator along with bearish price structure; providing credence to the possible downside in days to come. The 'RSI-Smoothened' on daily chart has slipped below the 30 mark, which generally can be treated as an alarming sign. Last time, this kind of scenario was seen few days ahead of the 'Demonetization' and then the rest was history. Hence, with reference to previous articles, we continue to remain cautious and one should avoid forming fresh longs in case of any bounce back. For the coming session, 10456 - 10500 would continue to act as immediate resistance; whereas, 10347 - 10300 remains to be an important support zone for the day.

During the session, only 'IT' conglomerates were on a roll as weakening of Indian Rupee (INR) against the US Dollar provided some strength to this space. We may continue to see such positive traction in marquee names within this basket."

Source : Equity Bulls

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