Key supports held; Rebound underway
Following Thursday's panic down day, markets exhibited a breather on Friday with Nifty ending marginally higher at 8611. The index opened on a flat note and went on to make a minor lower low, holding above the cluster of swing supports and traded in a range of 82 points. Nevertheless, it continues to close below its 50-day EMA pivot keeping the bears in the hunt for further weakness. Trading volumes returned back to normal levels and the marker breadth rebounded to 4:1 in favor of advancers. Volatility (India VIX) has subsided down to 17.18% from the peak of 18.45% and we expect readings between 16-19% in the short-term. Weekly chart displays a bold bearish candlestick that warns of further downside risk once the lows are breached. Momentum readings on the other hand have become neutral on the daily scale whereas the hourly indicators are in recovery mode after entering oversold thresholds. As long as Nifty trades above the 8515-8545 support cluster, expect a rebound rally back up to 8690-8710 levels in the immediate near-term. A breach below support will call for a deeper correction/retracement down to 8150. Having said that, bullish sentiment will be invigorated above 8800 which remains a short-term resistance.
Barring a marginal loss of -0.14% in FMCG index, all other sectoral indices ended the session in green and were led by gains in Realty (+3.15%), Oil & Gas (+1.7%) and Autos (+1.35%) indexes. Broader market Mid-cap and Small-cap indices relatively outperformed their frontline peer with gains of +1.95% and +2.13% respectively.
Bullish Setups: VEDL, HCLT, IOCL, ARBP, IBREL, MMFS
Bearish Setups: LT, TTMT, JETIN, CESC, KPIT
| Nifty Index |
|
| Bloomberg Code | NIFTY Index |
| Spot Price | 8611 |
| Resistance 1 | 8658 |
| Resistance 2 | 8714 |
| Support 1 | 8555 |
| Support 2 | 8515 |
| Nifty 20 SDMA | 8783 |
| Nifty 50 SDMA | 8690 |
| Nifty 200 SDMA | 7996 |
| Adv : Dec [NSE] | 1341 : 292 |
| Turnover Rs Crs. BSE+NSE cash | 25,739 |
| Oscillators | Comments |
| RSI | Neutral |
| MACD | Neutral |
| Stochastic | Bearish (OS) |
| DMI & ADX | Bearish & Trending |
* OB: Over Bought
OS: Over Sold
Edelweiss Technical Reflection (ETR): " Key supports held; Rebound underway " (03-Oct-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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