Weakness in the Indian markets extended mid-week as the benchmark index Nifty made a lower high and lower low for the eighth session. It has decisively closed below the 50-day EMA that was holding for previous three sessions despite having intraday breaches. Also the 'bullish gap' of 6th August between 5260 and 5220 got closed which should ease downside risks in the near-term. A close above the trend line coming from the intermediate low of 4770 has been held indicating a technical rebound should materialize from here. Volumes were on the higher side and the breadth ended in favor of declines underlining today's bearish day. Vols also picked up as the India VIX regained the 17% mark. Short-term momentum oscillator (Stochastic) is trading in the oversold region, and we continue to see positive divergence developing on hourly indicators suggesting a rebound rally is forthcoming. We expect Nifty to begin the counter-trend move in the next couple of session that should help it test 5300 / 5330 (38.2% and 50% retracements resply), with 5200 acting as the critical pivot.
Barring the gains in FMCG (+0.72%) index, all other sectoral indices ended the day with sharp cuts. The biggest knock was taken by Metals (-2.64%), Cap Goods (-2.54%) and Banking (-1.82%). Even the broader markets were not spared today, but managed to marginally outperform the benchmark index with losses of 0.31% for the Mid-cap index and -0.49% for the Small-cap index.
Bullish Setups: TCS, RIL, BIOS, GDSP, HPCL
Bearish Setups: CNXBANK, LT, HNDL, ONGC, IDFC, HDFCB
Regards,
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