PSU banks rebounded from multi-year trend line supports: Angel Broking

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

"We had a sluggish start for the day owing to slightly weak cues from the global bourses. However, it was merely a formality as we saw index recovering sharply in the initial hour to surpass the 10450 mark. This was followed by some consolidation; but, once again profit booking took place at higher levels and as a result, the index nosedived below morning's low by a whisker. Eventually, some ups and downs in final hours resulted into a flat close.

After seeing yesterday's gigantic recovery, today's follow up move was on cards. But since overall sentiments have dampened a lot, traders became cautious near intraday highs. In fact, this profit booking took place precisely after entering the mentioned resistance zone of 10460 - 10500. At one point, markets were rushing towards 10500 and were about to negate the 'Trend Line' breakdown happened on March 05, 2018. Traders gave respect to this development and hence, we saw Nifty precisely closing at this 'Trend Line' resistance level of 10430. With today's move, one thing is quite clear; the short sellers will become active once we see index sustaining below today's low of 10377. In this scenario, we may see resumption of the down move to test 10300 - 10260 levels. On the flipside, in case of a continuation of this relief rally, traders should look to lighten up longs in the zone 10480 - 10520.

At this juncture, a prudent strategy would be to remain light and should ideally focus on stock specific moves. Today, recent draggers 'PSU' banks finally showed some life as we saw massive bounce back in these beaten down counters. This was clearly on cards and hence, we suggested exiting shorts in our previous article. This was mainly on the back of 'Nifty PSU Bank' index rebounding from its multi-year trend line support of 2800 after forming a 'Bullish Hammer' pattern on Monday. Since they were deeply oversold, a possibility of further relief rally cannot be ruled out."

Source : Equity Bulls

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