We continue to remain cautious - Angel Broking

For the second consecutive week our bellwether indices, the Sensex and the Nifty posted weekly closings well above the psychological levels of 20000 and 6000, respectively. Despite negative movements for most part of the week, indices eventually ended the week on a positive note. This was mainly on the back of robust Q3 numbers from some of the index heavyweights like, Reliance Industries and L & T. Indices also found support from major global indices and the appreciation in Rupee against the dollar. However the mid and small cap counters corrected significantly, with many individual stocks falling more than 10% during the week. The market breadth is still significantly weak and we continue to mention key resistance levels as 20164 / 6102 for the week ahead. The weekly chart now depicts a candlestick pattern which resembles a 'Hanging Man'.

The said pattern has a negative implication and requires a confirmation in the form of closing below the low i.e. 19884 / 6007. Also the negative divergence on the RSI momentum oscillator on the daily chart is still intact and has bearish implications. Further, on Tuesday, the RBI is going to announce the 'Monetary Policy' and any disappointment may trigger pessimism in the market. A close below 19884 / 6007 would indicate a further fall and indices may slide towards the 19596 - 19406 / 5940 - 5897 levels. On the other hand, the 20164 / 6102 level continues to be a still resistance for the market. We continue to remain cautious and advise traders to reduce their long positions and book partial profits in individual stocks near to the 19950 - 20100 / 6070 - 6125 mark.

On Friday, we witnessed short covering in Bank nifty and as a result the index has closed near 12700 mark. On the hourly chart, we are now witnessing a falling wedge pattern breakout at 12635 level. In addition the momentum oscillators on the hourly chart are positively poised. Traders having long position in the index should maintain a strict stop loss of 12509. On the upside 12778 - 12838 level are likely to act as resistance and 12572- 12534 are likely to act as support for the day.

Source : Equity Bulls

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