Nifty has finally succumbed to selling pressure after peaking at 8711 with a sharp cut of 0.91% to close below the minor support of 8570. The index opened on a weak note and began to lose ground with intermittent bouts of strong selling, especially in the closing hour preceded by some intraday consolidation. The index has thus closed below its 12 day SMA but manages to stay above the 21 day EMA support at 8520. Trading volumes clocked at average levels whereas the market breadth continues to deteriorate at 1:3 in favor of decliners. Volatility (India VIX) has risen up to 16.25% showing an upward trajectory in the short-term. Momentum indicators have now moved out of bullish territory to neutral or bearish readings and indicate a weak phase in the short-term. Above technical evidences suggests the short-term trend is reversing lower; however Asian cues point to a bullish gap and hence expect the pullback to face resistance at 8620-8640 range where fresh shorts can be initiated. On the downside we expect Nifty to drift down to 8480 / 8300 with 8711 as preferred stop-loss.
Barring marginal gains of +0.15% in Telecom index and +0.07% in Metals index, all other sectoral indices ended the session in red and were led by losses in Realty (-2.15%), FMCG (-2.04%) and Cap Goods (-1.74%) indexes. Broader market Mid-cap and Small-cap indices continued to underperform with losses of -1.5% and -1.14% respectively.
Bullish Setups: HCLT, PWGR, SUNP, PNB, SUNTV
Bearish Setups: ICICBC, DRRD, PIDI, GNP
| Nifty Index |
|
| Bloomberg Code | NIFTY Index |
| Spot Price | 8544 |
| Resistance 1 | 8593 |
| Resistance 2 | 8638 |
| Support 1 | 8520 |
| Support 2 | 8489 |
| Nifty 20 SDMA | 8544 |
| Nifty 50 SDMA | 8332 |
| Nifty 200 SDMA | 7852 |
| Adv : Dec [NSE] | 407 : 1213 |
| Turnover Rs Crs. BSE+NSE cash | 24,481 |
| Oscillators | Comments |
| RSI | Neutral |
| MACD | Bearish |
| Stochastic | Bearish |
| DMI & ADX | Bullish & Trending |
* OB: Over Bought
OS: Over Sold
Edelweiss Technical Reflection (ETR): " Pullback to 8620-8640 " (04-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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