Nifty resumed its downward draft after a day of recovery owing to the August expiration by dropping 1% to close below the 5300 mark. The day began on a weak negative with the index opening lower on weak global cues ahead of the crucial speech by US Fed chairman at the Jackson Hole symposium and continued to climb down as the day progressed on renewed selling pressure. Trading activity was average and the breadth slid in favor of declines. Volatility has been steadily on the up move ending at 17.30%. Nifty has somehow managed to close above the important trend line falling from the Feb peak at 5250 and with hourly momentum rolling bullish from oversold levels, expect a rebound rally back towards the 5335/5350 resistance cluster in the immediate near-term. On the weekly charts, Nifty has shaved off previous three week’s gains suggesting strong bearish undertone; and for the month though it has managed meager gain of 0.50%. We enter a period of seasonally high volatility both in the Indian and global markets and thus prefer to be cautious. The upside is capped at 5345 / 5370 (61.8% retracement of the recent fall) where fresh selling is likely to emerge having potential to pull Nifty down to 5200 (intermediate supports) and possibly lower towards 5000.
An overall bearish trend was prevalent in the sectoral indices with the exception of Healthcare (+0.32%) index that witnessed some defensive buying. Among the top losing sectors were Metals (-1.21%), Power (-1.20%) and Auto (-1.07%). Broader markets once again outperformed their frontline index with gains of 0.15% for the Mid-cap index and 0.22% for the Small-cap index.
Bullish Setups: INFO, TCS, HUVR, RIL, BIOS, APNT, DRRD
Bearish Setups: CNXBANK, LT, HNDL, ONGC, JPA, STLT
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