Gemstone Equity Research & Advisory Services

Outlook For Wednesday: NIFTY May See Extension Of The Move; Stay Alert At Higher Levels

While speaking about micro trend, we had mentioned in the previous edition that the NIFTY is seen resisting to the 11225-11235 levels for over four sessions in a row. Tuesday’s trade ensured that the NIFTY finally takes out this micro resistance zone. The markets saw a positive start to the day. The NIFTY opened positive and traded with capped gains in the first half of the trading session. However, it was early afternoon trade and beyond that saw some real strength coming in. The NIFTY went on to move past the 11300 levels. While continuing to trade near the high point of the day until the end of the session, the headline index settled with gains of 168.75 points (+1.52%).

In all probabilities, the NIFTY has resumed its move to test the upper trend line of the rising channel that it is presently trading in. Though it may not do it right away, the NIFTY is likely to test the 11400-11450 levels if the present momentum continues. Another show of the resilience to any downside is that the NIFTY not only resumed its up move after a sideways consolidation, the INDIAVIX, which is the volatility index also came off by 5.14% to 23.7300 which is one of its lowest levels of recent times. The momentum remains in place unless the NIFTY slips below 11100 levels.

Tuesday may see some extension of the up move, at least in the initial trade. The levels of 11335 and 11410 will act as resistance points. The supports will come in at 11245 and 11175 levels.

The Relative Strength Index (RSI) on the daily chart is 72.18; it is neutral and does not show any divergence against the price. The daily MACD is bullish as it trades above its signal line. A white body emerged on the candles. This signals that the close of the session is higher than its open indicating at the secular up move on the trading day.

The pattern analysis shows that the NIFTY is likely to move higher towards the 11400-11450 zone as that is the upper edge of the rising channel that the Index is trading in to at present. The NIFTY has resumed this move after resisting mid-way inside the channel to the 11225-11235 area. Presently, the Index trades above all its key moving averages.

All in all, markets are showing strength with along with each minor declines. This is evident in the discomfort of the market participants that is evident from the sideways consolidation and the way even a minor decline is bought at lower levels. Having said this, we keep our analysis on similar lines. We recommend continuing to follow the up move by strictly trailing stops with every move on the upside while continuing to stay alert at higher levels. 

Milan Vaishnav, CMT, MSTA
Consulting Technical   Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK)  | (Research  Analyst, SEBI Reg. No. INH000003341)

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