In a much resilient performance, the Indian equity markets put up a strong show ahead of the weekly options expiry and ended the day with modest gains. Following a relatively weak Asian trade setup, the NIFTY saw a modestly negative opening in the morning. However, the early session was spent in a range-bound trade where the NIFTY oscillated back and forth around its previous close levels. It was in the last hour and a half of trade that took the Index higher. NIFTY saw some strength coming in and it again went near to its key resistance area. The headline Index finally ended the day with a net gain of 61.40 points (+0.39%).
The markets have a weekly options expiry coming up; the general market trend is likely to stay dominated as usual by options expiry. The 16000 level has the maximum Call OI accumulation over the past many days; this level is expected to continue positive stiff resistance to any upside moves. On the other hand, significant PUT writing is seen at 15800 levels. This makes the mid-point of 15900 an inflection point for the markets. The opening of the markets and the behavior of NIFTY against the price levels of 15900 will be crucial to watch.
Thursday will see the levels of 15900 and 15965 acting as immediate resistance points. The supports come in at 15800 and 15735 levels.
The Relative Strength Index (RSI) on the daily chart is 62.90; it shows a bearish divergence against the price. While the NIFTY marked a new 14-period high, the RSI did not, and this resulted in the bearish divergence. The daily MACD is bearish and remains below the signal line. A white body emerged on the Candles. Apart from this, no other significant formations were observed.
The pattern analysis shows that the NIFTY has once again attempted to test and move past the crucial resistance zone of 15850-15900 levels. While the index has closed in the middle of this, any move above 15900 will increase the possibility of the NIFTY testing the 16000-mark.
All and all, despite a buoyant session, the markets need to be approached cautiously. For getting a little aggressive again, moving past the 15900 levels and staying above that will be crucial for the Index. In other words, so long as the NIFTY does not move past 15900 levels convincingly, it stays vulnerable to profit-taking bouts at higher levels. . Unless that happens, we recommend remaining highly stock-specific and selective in the approach.
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)
