Gemstone Equity Research & Advisory Services

Thursday Trade Setup: NIFTY To Stay Affected By Geopolitical Tensions Amid Weak Technical Setup; Moving Past This Level Important

The Indian equity markets headed nowhere as they traded directionless for the entire day and end the day with a modest loss. The NIFTY saw a negative opening to the trade, but after oscillating in a rage in the morning, the markets inched higher in the positive territory. At one point in time, it tested the high just above the psychological 10000 mark. However, geopolitical tensions owing to the standoff between India and China dampened the sentiment of the otherwise technically vulnerable markets. The NIFTY came off from the high point and eventually close with a net loss of 32.85 points (-0.33%).

With the options weekly expiry coming up, Thursday’s session will remain a controlled one with the options expiry led moves dominating the trend. That being said, the strikes of 10000 level currently has a highest concentration of Call OI which shifted lower from the 10200 mark. Unless any tactical shift occurs, NIFTY is unlikely to move past these 10000 levels even if any up move occurs. The primary setup stays bearish and any moves on the upside will keep NIFTY vulnerable to selloff from higher levels. The India Volatility Index, INDIAVIX, slowly extended its rise once again by increasing by 1.18% to 33.3550.

Thursday is likely to see the levels of 9935 and 10000 acting as resistance points. The supports will come in lower at 9810 and 9705 levels.
The Relative Strength Index (RSI) stands at 55.94 on the daily charts; it stays neutral and does not show any divergence against the price. The daily MACD has slipped below its signal line and it is bearish.  A Doji occurred on the candles. Within a relatively weaker setup, such a candle formation can infuse weakness and can potentially reverse the trend on the negative side.
All in all, the markets face more than once factors that can influence its move on the negative side. On one hand, the markets facing the possibilities of the geopolitical tensions increasing, and on the other hand, the short-term technical setup remains weak. Apart from this, the expiry will continue to dominate the trend and also infuse some volatile moves in the session.
Given the present technical juncture, unless the NIFTY moves past the 100-DMA which presently stands at 10132, no sustainable up moves can be expected. We reiterate a cautious outlook on the markets.
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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