Tech View: 8,683 crucial level for Nifty; select midcaps will continue to outperform

By: | Updated: September 28, 2016 8:56 AM

Tech View: 8,683 crucial level for Nifty; select midcaps will continue to outperform

BSE Sensex, NSE NiftyOn the derivative front, the NIFTY September futures have shed over 43.96 lakh shares or 17.59 per cent in open interest. (Photo: Reuters)

The domestic equity markets traded precisely on the analyzed lines as they ended with a minor cut after remaining highly volatile and choppy. The levels 8,680 continued to remain critical and the markets nearly tested its 50-DMA. On Wednesday, we can see the markets attempting to stabilise and just like yesterday, the levels of 50-DMA which is 8,683 will remain critically important to watch out for. This keeps our analysis on similar lines like yesterday. We also enter the penultimate day of expiry of the current derivative series and this will see the session remaining dominated with rollovers. For Wednesday, the levels of 8,745 and 8,790 will act as immediate resistance levels while the supports will come in at 8,680 and 8,610. The RSI—Relative Strength Index on the Daily Chart is 47.0865 and it has reached its lowest value in last 14-days and this is Bearish. The Daily MACD stays bearish while it trades below its signal line.

On the derivative front, the NIFTY September futures have shed over 43.96 lakh shares or 17.59 per cent in open interest. The October futures have added over 49.83 lakh shares or 56.81 per cent in open interest. Coming to pattern analysis, it is very much evident that a lower top has been formed at 8,900 levels after the markets formed its intermediate top at 8,968 levels. It also becomes important to note that there will be no significant up move unless the markets move past 8,900 levels and until this happens will see the markets oscillating in a trading range. In the immediate short term, the levels of 50-DMA will continue to act as important support at close levels. Any drift below this level will induce some more weakness in the markets.

In the session, we may see banks attempting to find bottom. Select midcaps and other sector specific out-performance will continue. It is advised to approach the markets with individual stock specific strategies. Positions on either side should be kept limited and more cash should be preserved as the markets will establish its directional bias on either side. Though, with no structural damage on the Daily Charts, cautious optimism is advised for today.

(The author is CMT, Consultant Technical Analyst at Gemstone Equity Research & Advisory Services)

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