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Gemstone Equity Research & Advisory Services

Wednesday Trade Setup: NIFTY Might See A Stable Start To The Day; Markets Stays Vulnerable At Higher Levels

The markets witnessed some consolidation on a closing basis, but the day remained much weaker than the previous session. Following an overnight strong close of the US markets, Asia also started on a firm note. The Indian markets saw a strong opening, however, it failed to capitalize on it. The buoyant opening saw the NIFTY opening just below the 10400 levels. After an initial range bound trade, the Index came off over 100 points from the high point of the day. Some recovery was seen in the final hour of the trade. The headline index finally ended the day on a flat note with a negligible loss of 10.30 points (-0.10%).
 
 

Over the past couple of days, the NIFTY as traded in a range bound manner. We expect the markets to continue trading in a defined range before it takes a strong directional call. The Index is likely to consolidate in a defined range with the zones of 10400-10450 posing stiff overhead resistance. The volatility remained negligible; the India Volatility Index, INDIAVIX rose by a marginal 0.72% to 29.1175. Unless the zones of 10450-10450 are taken out, NIFTY will continue to face selling pressure at higher level and this will keep the index vulnerable near that zone.

 
A stable start is expected to the day. Wednesday is likely to see the levels of 10350 and 10415 acting as immediate resistance levels. The supports will come in at 10265 and 10190.
 
The Relative Strength Index (RSI) on the daily chart is 60.88; it stays neutral and does not show any divergence against the price. The daily MACD is bearish as it trades below its signal line. A black body emerged, and apart from this, no other formations were observed on the candles.
 
The pattern analysis shows that the Index is still in the upward rising channel. This channel was formed after the rising wedge resolved in a continuation pattern. However, the NIFTY appears weaker as it has formed a small lower top within the rising channel and is heading mildly lower amid range bound moves.
 
There are mild possibilities of a pullback within a small range on Wednesday. In case of such expected up moves happening, it would be extremely important to guard profits at higher levels. NIFTY has a relatively weak technical setup; no up moves will sustain at higher levels unless the NIFTY moves past the 10500 mark convincingly. Until this happens, markets in general will remain vulnerable at higher levels. We strongly reiterate and recommend protecting profits vigilantly while keeping overall exposures modest and avoiding excessive exposures on either side.
 
Milan Vaishnav, CMT, MSTA
Consulting Technical   Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK)  | (Research  Analyst, SEBI Reg. No. INH000003341)
The markets witnessed some consolidation on a closing basis, but the day remained much weaker than the previous session. Following an overnight strong close of the US markets, Asia also started on a firm note. The Indian markets saw a strong opening, however, it failed to capitalize on it. The buoyant opening saw the NIFTY opening just below the 10400 levels. After an initial range bound trade, the Index came off over 100 points from the high point of the day. Some recovery was seen in the final hour of the trade. The headline index finally ended the day on a flat note with a negligible loss of 10.30 points (-0.10%).
Over the past couple of days, the NIFTY as traded in a range bound manner. We expect the markets to continue trading in a defined range before it takes a strong directional call. The Index is likely to consolidate in a defined range with the zones of 10400-10450 posing stiff overhead resistance. The volatility remained negligible; the India Volatility Index, INDIAVIX rose by a marginal 0.72% to 29.1175. Unless the zones of 10450-10450 are taken out, NIFTY will continue to face selling pressure at higher level and this will keep the index vulnerable near that zone.
A stable start is expected to the day. Wednesday is likely to see the levels of 10350 and 10415 acting as immediate resistance levels. The supports will come in at 10265 and 10190.
The Relative Strength Index (RSI) on the daily chart is 60.88; it stays neutral and does not show any divergence against the price. The daily MACD is bearish as it trades below its signal line. A black body emerged, and apart from this, no other formations were observed on the candles.
The pattern analysis shows that the Index is still in the upward rising channel. This channel was formed after the rising wedge resolved in a continuation pattern. However, the NIFTY appears weaker as it has formed a small lower top within the rising channel and is heading mildly lower amid range bound moves.
There are mild possibilities of a pullback within a small range on Wednesday. In case of such expected up moves happening, it would be extremely important to guard profits at higher levels. NIFTY has a relatively weak technical setup; no up moves will sustain at higher levels unless the NIFTY moves past the 10500 mark convincingly. Until this happens, markets in general will remain vulnerable at higher levels. We strongly reiterate and recommend protecting profits vigilantly while keeping overall exposures modest and avoiding excessive exposures on either side.
 

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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