The zone of 15900-15950 remained a tough hurdle to clear for the markets as the NIFTY saw some corrected moves as it ended the day with a modest loss. The markets saw a positive start to the day. The NIFTY opened with modest gains and traded in a limited and defined range for the first half of the session. However, the second half saw a wave of profit-taking and the NIFTY came off over 180-points from the high point of the day. A modest recovery was seen in the end, but the headline index ended with a net loss of 78 points (-0.49%).
Though the negative ending for the markets has is modest on a closing basis, but the coming off of the NIFTY by over 180-odd points from the high point reinforces the importance of the 15900-15950 zone on the upper side. On the lower side, the markets have again gone very near to their 50-DMA which stands at 15652 at present. This level will act as important support if the markets continue to consolidate and correct within the defined range.
The markets are in for some technical pullback, but the levels of 15800 and 15850 may see resistance as a lot of Call writing took place at these strikes. The supports come in at 15700 and 15610 levels.
The Relative Strength Index (RSI) on the daily chart is 50.19; it has marked a new 14-period low which is bearish. It also shows a bearish divergence against the price. The daily MACD is bearish and stands below the signal line. A large black body occurred on the candles. Its emergence near the high point reinforces the credibility of the 15900-15950 zone as a major resistance area.
The NIFTY has been under sideways consolidation for over a month now; unless the 50-DMA is violated on a closing basis, it will continue to remain in the current sideways consolidation move. The longer the time the NIFTY stays in this sideways any move on either side will have more conviction.
The volatility also increased; INDIAVIX spiked 6.29% to 13.2325. As the NIFTY is above all the key moving averages, it is recommended not to get aggressive in creating shorts. Also, on the long side, it is strongly suggested to continue to stay light on overall exposures. The bottom line is that unless the NIFTY takes any directional bias below the 50-DMA or above the 15900-15950 zones, it would be prudent to continue staying stock-specific and selective while approaching the markets.
This was first published by The Economic Times.
Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)
