August series derivatives settlement day has seen the Nifty has drop the most in 10 sessions with a cut of 0.67% and ended below the 8600 handle. After a minor gap up open, the index traded sideways till the morning session and began to slide lower in the second half with selling pressure intensifying in the last couple of hours. Being an expiry session, the volumes clocked at above average levels and the market breadth ended 2:3 in favor of decliners. Volatility (India VIX) continues to dive down to fresh calendar low of 13.29% suggesting a low risk near-term environment and hence could keep the index in a range near-term. Momentum readings have turned bearish on few oscillators but remain bullish to neutral on intermediate charts. Nifty is now trading at the lower band of a triangle pattern and as long as 8540 remains inviolate expect a recovery back above 8600 and within the consolidation range. We look for an eventual breakout above 8700 for possible target of 8850 in continuation of the ongoing up trend.
Trend among sectoral indices was largely negative led by losses in Telecom (-1.82%), Metals (-1.43%), and IT (-1.28%); whereas the only gaining sectors were FMCG (+0.31%) and Oil & Gas (+0.29%) indexes. Boarder market Mid-cap and Small-cap indices managed to relatively outperform their frontline peer with marginal losses of -0.35% and -0.11% respectively.
Bullish Setups: INFO, SAIL, ICICIBC, BHEL, VEDL
Bearish Setups: AJP, GNP, POWF, HEXW
| Nifty Index |
|
| Bloomberg Code | NIFTY Index |
| Spot Price | 8592 |
| Resistance 1 | 8640 |
| Resistance 2 | 8661 |
| Support 1 | 8580 |
| Support 2 | 8540 |
| Nifty 20 SDMA | 8634 |
| Nifty 50 SDMA | 8474 |
| Nifty 200 SDMA | 7886 |
| Adv : Dec [NSE] | 640 : 942 |
| Turnover Rs Crs. BSE+NSE cash | 28,083 |
| Oscillators | Comments |
| RSI | Neutral |
| MACD | Bearish |
| Stochastic | Bearish |
| DMI & ADX | Bearish & Non Trending |
* OB: Over Bought
OS: Over Sold
Edelweiss Technical Reflection (ETR): " Expiry sub-8600 " (26-Aug-16-EDEL)
Regards,
Tejas J. Shah +91 22 4063 5534
Edelweiss Research is also available on Bloomberg EDEL <Go>, Thomson First Call, Reuters and Factset. Please write to us in case you need any assistance in this respect.
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