Some reality check at record highs, but the broader trend still remains up: Angel Broking

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

"Over the weekend, some of the top heavyweight constituents like, Reliance, HDFC Bank and TCS posted their quarterly numbers. So the reaction to these developments was seen at the opening as we saw pre-open session suggesting a bumper opening at record highs for Nifty above the milestone of 12400. For Bank Nifty also, it suggested a strong bump up of over a percent; but all this ecstasy did not last too long. The markets started giving up right from the word go and before anyone could realise, we were significantly off the opening highs to enter a negative territory. In fact, things worsened as the day progressed and eventually, Nifty and Bank Nifty concluded the session with severe cuts.

In our sense, the opening tick was clearly an overreaction from the market participants and hence, things had to reach to equilibrium. Now, the extended correction also is an overreaction or not that we need to see in the forthcoming session. Nifty has closed at its crucial juncture now as we can see a cluster of multiple evidences such as '20-DEMA' and '200-SMA' on hourly chart converging in the zone of 12220 - 12200. Hence, we need to see how index behaves around it. If we have to anticipate one direction, we expect Nifty to find support around it and give some rebound towards 12270 - 12290 in the forthcoming session. The similar view point goes with the banking index as well. Hence, traders are advised not to get carried away with this and refrain from creating short positions.

Today, along with key benchmark indices, the broader market too has taken a toll but the overall correction was not severe. But we are not at all surprised with this; because in our previous articles, we had clearly stated Midcap index entering an overbought territory. However having said that, we still believe its merely a profit booking after a sharp run up and we expect the declines to get bought into."

Source : Equity Bulls

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