Midcap index snapped five days gains, expect weakness to continue

newspatrolling.com :

“Monday’s tail end sell off was followed by a gap up opening mainly on the back of strong favorable cues from the HANG SENG (Hong Kong) index. However, the entire lead got sold into in first 10 minutes of trade. In fact, the selling pressure aggravated to breach previous day’s low as well. However, a smart recovery in the penultimate hour pushed the index higher to conclude with negligible gains.

 

With reference to earlier article, the index precisely started correcting after testing mentioned resistance of 10490 in the opening trades. Once again, the banking pack turned out to be the weakest link as we saw heavyweight banking stocks dragging the index during the major part of the day. However, this was followed by a smart recovery from a kissing distance of 10400; courtesy to decent bounce back in BANKNIFTY from its key support zone.

 

Going ahead, we continue to see 10490 – 10520 as a sturdy wall and despite 10400 holding as a strong support, we expect the index to slide below it to test 10380 – 10340 in days to come. This time, the profit booking is seen in the broader market as well. Since last couple of weeks, we have been warranting some caution in NSE Midcap index as we were observing some contradictory cautionary signs. Today, we saw midcap index correcting to nearly a percent to snap last five sessions’ gains. This is what we have been anticipating and considering today’s close, we expect this weakness to extend in the midcap basket as well. Hence, traders are repeatedly advised to be selective and avoid taking undue risk in the market as the volatility may continue to scale up.”