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Trade setup for Monday: Residual Budget reaction to keep market depressed

The first Budget of the Narendra Modi Government in its seco..

The first Budget of the Narendra Modi Government in its second term largely failed to provide any cheer to the stock market.

Fridays session remained typical of any budget day. After the initial rangebound movement in morning trade, Nifty reacted negatively.

Though some intermittent, volatile movements were seen, the index finally ended near the low point of the day, losing 135 points, or 1.14 per cent.

Niftys technical setup does not favour any significant rise in the market.

The market has a very rough terrain to negotiate at higher levels; especially in the 11,900-12,000 zone. The index is currently below its short-term 20-DMA, which is at 11,828.

Though mild technical pullbacks cannot be ruled out, we will see some residual reactions to the Budget in early trade on Monday.

A flat to a mildly positive start is expected on Monday, with the 11,860 and 11,930 levels acting as key resistance. Supports will come in at 11,770 and 11,730.

The Relative Strength Index (RSI) on the daily chart is at 50.0107; it remains neutral and shows no divergence against price. The daily MACD remains as it trades above the signal line but it appears to be moving towards a negative crossover.

An Engulfing Bearish Line has occurred on the chart. The occurrence of such a candle during an uptrend is a bearish indication. Though it requires confirmation on the next trading day, it can mark a potential short-term top for the market.

Fridays session saw weakness in trade, which was secular in nature. All the sectoral indices, barring PSU banks and FMCG, ended in the negative zone.

We expect residual reactions to the Budget to continue. The index has ended a notch below itRead More – Source

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