In our previous note, we had mentioned about the fractured breadth that the market witnessed for the past couple of sessions. On Tuesday, the benchmark Nifty50 suffered a crack and ended with a net loss of 101 points or 0.97 per cent.

Going into Wednesday’s session, we can expect a mild technical pullback. While remaining highly stock specific, the index may see a mild improvement in market breadth. In the case of a technical pullback, it would be important to see if it sustains and arrests the downside moves.



No significant rise in expected unless market breadth improves. The 10,395 and 10,430 levels will play out as immediate resistance for the Nifty50. Supports can be expected near 10,315 and 10,290 levels.

The Relative Strength Index or RSI on the daily chart stood at 60.0796 and it has just moved below the overbought territory. It shows no divergence otherwise. The daily MACD is still bullish as it trades above its signal line. An engulfing bearish line has occurred after an upward move. It has established the credibility of the resistance area at 10,490 level. This means for any fresh sustainable bounce to occur, the Nifty50 will have to move past the 10,490 level.

We can go into the session expecting a mild technical pullback and see such a pullback can sustain. As it happened in the previous session, stock-specific out-performance would continue. We continue to reiterate a highly cautious view while advise keeping overall exposure at modest levels.

STOCKS TO WATCH:

Fresh shorts were seen on the counters of Suzlon, Adani Power, ONGC, PFC, Reliance Industries, PTC and Vedanta. Stocks like Ashok Leyland, Zee Entertainment, Bharti Infratel and Bharat Forge are expected to remain resilient.

(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)