September kicks-off with bloodbath, mid-cap underperforms

Major indices have witnessed bloodbath from the start of this week. For the third consecutive day on Wednesday, the indices have shed considerable gains. Where the benchmark indices Nifty and Sensex tumbled more than 3 per cent, BSE Midcap index underperformed by plunging nearly 5.5 per cent. BSE Midcap index underperformed on Wednesday’s trade too, registering 1.2 per cent loss at 14:32 hours. BEL, M&M Finance and IGL were the top losers posting 15, 5 and 3.9 per cent, respectively.

The investor sentiments were further bruised by a nosedive in Indian rupee to its new all-time low of 71.96/USD amid weak global cues. Both FIIs and DIIs turned net sellers of Rs. 1,464.44 crore and Rs 563.55 crore in September till Tuesday. All-in-all, the major indices witnessed profit booking from the peak levels.

Back to the Midcap index, the index had formed a higher top higher bottom reversing from its low at 15000 levels made on July 19. The index had given a Hammer like pattern with which it saw a consistent upside, breaching its major resistances at 16175; followed by 16249. The index continued to rally upside and had neared its trend reversal resistance range of 17015-17059. However, it resisted at 17017 levels and retreated to trade lower nearly up to its first support at 16061.

Currently, the index is trailing at its 100 and 200-day EMA support level. Going forward, we maintain our resistance at 17015-17059, provided 15550 followed by 16660 is broken on the upside. The index had witnessed oscillators turnaround from the overbought zone and hence if the index dips further we hold 16008 followed by 15770 as the supports, which are 50 and 61.8 per cent retracement levels of the prior weekly upward rally from 15000 to 17017.