Markets on May 26: Brisk fall

Persistent selling that accentuated in the final hour of trade led the market to lose further ground. However,the indices did stage a mino...

Persistent selling that accentuated in the final hour of trade led the market to lose further ground. However,the indices did stage a minor comeback during the fag end. The Sensex was down by 324 points, while Nifty closed 120 points lower. On Japanese candlesticks chart, we are having an evening star pattern (a top reversal pattern composed of three candles) on the daily chart. Further going into detail, the volume is light on the first candlestick session and heavy during the third candlestick session. This shows a reduction of force in the current trend. Also, today’s evening star pattern has occurred with a negative crossover in the momentum indicator KST,which is pronounces the impact. Bears with 1,434 declines and 1,355 advances dominated the market breadth on the BSE.

On the hourly chart, momentum oscillator KST is marching southward after giving a false positive crossover, which is not at a good sign. Also, the hourly averages have got violated on closing basis. Our short-term bias is down for the target of 3900 with reversal pegged at 4510. However, our mid-term bias is up for the target of 4550 with reversal placed at 3700.

Stocks from mid-cap and small-cap space ended the day on a lower note as well, recording losses of 3.4% and 3.12% respectively. Stocks from realty, capital goods, banking and power sectors were battered the most, while information technology counter managed to attract investor’s interest. From the 30 stocks of the Sensex, Hindalco Industries (up 3%) and Infosys Technology (up 2%) posted the maximum gains, while Reliance Communications (down 10%), Ranbaxy Laboratories (down 8%) and Tata Motors (down 6%) were left bruised.