Manish Hathiramani, Technical Analyst & Proprietary Trader at Deen Dayal Investments is of the view that 8500 is the key level for Nifty and feels that the Index may slide further below is level.
The markets this week proved to be a test of patience and skill - patience because of a lack of direction and skill to stay away from the markets when you do not have a defined direction of movement!
The Nifty finds itself stuck in a range - broadly speaking this is between 8500 and 8700 but if we look at this more minutely, it was between 8550 and 8680. The reason to mention this is to explain that the smaller the gap of the range, the more difficult it is to trade. It can be very easy to get stuck in a trade - both long or short. Once stuck, there are greater chances of making a loss as one could be trapped on both sides of the range.
Several reasons can be attributed to this kind of lackluster movement of our markets - cautious stance by investors and traders owing to lack of earnings and economical data and also the Fed speech on Friday August 28, 2016. The F&O expiry of Thursday could be another factor that played spoil sport.
In the week ahead, the key level for the Nifty is 8500, in and around the last low of 8518 which was made on August 4, 2016. This is the point from where the markets turned sideways. If we were to break this level, we could be heading South to maybe levels closer to 8400 and I would not be surprised if that fall gets extended further.
The Bank Nifty could be a savior on this front - it was on a steady uptrend but lost its steam this past week. If it continues to be sideways or gets negative, it would accentuate the bearishness of the Nifty.