The ongoing downtrend in Nifty has extended after a brief two-session consolidation period as the index loses 1.8% to close under the psychological and technical support of 8000, thus denting sentiments. Immediately after a higher open, Nifty began to slide down on high intensity followed by a rather sideways price action in the second half capped by the steeply declining 5 & 13 hourly EMAs, thus forming a large bearish candlestick that warns of further downside. Trading volumes nevertheless clocked at below average levels and the market breadth was extremely weak at 1:7 in favor of decliners. Volatility (India VIX) has once again ticked up to 19.1% from 17.8% and is likely to swing between 17-21%. Despite momentum oscillator (RSI) trading in an oversold zone, prices are under pressure, but requires to hit a major support area for a recovery to materialize. Nifty is within kissing distance of 7897 (50% Fibo retracement level of 6825-8968) that can prompt profit taking by the bears. Look for intraday recovery and minor higher highs to trade the pullback rally in the immediate near-term.
It was a secular down day at the bourses as sectoral indices ended with sharp cuts and were led by Realty (-4.7%), Metals (-3.3%) and Autos (-3.25%)l; whereas IT (-0.4%) and Telecom (-0.55%) were relative outperformers. Broader market Mid-cap and Small-cap indices strongly underperformed their frontline peer with losses of -2.8% and -3.1% respectively.
Bullish Setups: ENGR, NTPC, IDEA, OINL, TECHM
Bearish Setups: GAIL, JSTL, HNDL, EIM
| Nifty Index |
|
| Bloomberg Code | NIFTY Index |
| Spot Price | 7929 |
| Resistance 1 | 7963 |
| Resistance 2 | 8000 |
| Support 1 | 7898 |
| Support 2 | 7837 |
| Nifty 20 SDMA | 8427 |
| Nifty 50 SDMA | 8609 |
| Nifty 200 SDMA | 8139 |
| Adv : Dec [NSE] | 206 : 1462 |
| Turnover Rs Crs. BSE+NSE cash | 22,014 |
| Oscillators | Comments |
| RSI | Bearish (OS) |
| MACD | Bearish |
| Stochastic | Bearish (OS) |
| DMI & ADX | Bearish & Trending |
* OB: Over Bought
OS: Over Sold
Edelweiss Technical Reflection (ETR): " Sentiment dented below 8000 " (22-Nov-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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