NIFTY EXTENDS CONSOLIDATION; 8540-8730 ARE THE BOUNDARIES
US indices fell 0.4%-0.7% despite gains in oil and awaiting the release of the minutes from the Federal Reserve's July meeting.
Oil prices continued to advance, climbing to near five-week highs. US oil gained 1.8% to $46.58 a barrel and Brent was up 1.8% at $49.23.
July reading of the consumer price index (CPI) came in unchanged, matching expectations, and July housing starts came in at a five-month high. July industrial production for rose 0.7%, more than the 0.3% expected increase.
Dollar index fell nearly 0.8% to 94.78 from 95.60, the lowest level since June 23. Gold gained $9 to $1357 an ounce. Yen hit a high of 99.53 versus the dollar.
European markets lost 0.6%-1.2%. UK's CPI for July came in at 0.6%, marking the biggest rise in consumer prices since November 2014.
After falling about eight tenth of a percent in the morning, benchmark indices recouped nearly half of the losses to end lower by about a third of a percent. Sensex settled at 28065, down 88 points while Nifty lost 30 points to finish at 8642. BSE mid-cap index however gained 0.6% and the small-cap index ended flat.BSE Telecom index tumbled 1.6%, becoming top loser among the sectoal indices, followed by 1.3% each cut in IT and Teck indices.
FIIs net bought stocks and stock futures worth Rs 685 cr and 430 cr respectively but net sold index futures worth Rs 107 cr. DIIs were net sellers to the tune of Rs 109 cr.
Rupee appreciated 12 paise to end at 66.76/$.
Today morning Nikkei is up about half a percent, Hang Seng is marginally higher and Shanghai is down 0.3%. SGX Nifty is suggesting about 20 points lower start for our market.
As we have been mentioning Nifty is in a consolidation mode after a big upmove and traders would do well to keep trading volumes low till this consolidation gets over and a breakout, on either side, materializes.
34-DMA as well as the immediate previous bottom on the daily chart is placed around 8540, and therefore 8540 is the important immediate support to eye. On the way up 8700-8730 is the supply area, a decisive crossover of which is required for the fresh upmove.