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Below is quote on Some hiccups at record highs, few midcaps nosedived by Mr. Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One Ltd

Once again the cheerful mood across the globe led to a head start at new highs for our markets. Nifty reached yet another milestone of 18600 in the initial trades. However, due to some profit booking in heavyweights, the markets not only gave up its lead; but also slipped inside the negative territory in the first hour itself. This was followed by a v-shaped recovery as we moved closer to the midsession. Everything looked as per the routine, as markets regained strength from the initial decline. But it was not done with its action yet as we witnessed a recurrence of the selling pressure at the stroke of the penultimate hour. Eventually, Nifty ended the session tad above 18400 by shedding nearly 200 points from the high.

It was a complete roller-coaster for our markets as we saw wild swings on both sides. However, the way market closed today, it does not bode well for the bulls. Nifty not only ended its 7-days winning streak but also filled major portion of yesterday’s upside gap. In our previous commentary, we had clearly mentioned how ‘Run away’ gaps are considered as strong trend but at the same time, if the gap gets filled immediately, it’s a sign of caution. Today, looking at the index, one may not be able to understand the actual activity. Because some of the recent high beta movers literally took nosedived from their highs and the velocity at which they came off, it’s not an encouraging sign. We may have been asking to lighten up longs since last 3-4 weeks and the market did not oblige at all. But it’s important to stay light to avoid the vicious knock that we witnessed in some of the counters today. It’s always better to be safe than sorry.

Anyways, despite today’s price development, there is no major distortion in key indices yet. But a follow through selling in next couple of sessions, would certainly confirm the short term correction in our market. Hence, for the coming session, 18350 – 18300 are the levels to watch out for. A sustainable move below this would be considered as a first sign of weakness. On the flipside, 18500 – 18600 has now become immediate hurdles. All eyes on midcap index because there were few casualties seen in the second half, which is the topping up sign for some of these counters.

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