Yet another day, and yet another session of a resilient performance and consolidation by the Indian equity markets. In contrast where the global technical setup is relatively weaker, the Indian markets put up a strong show and continued to consolidate instead of showing any corrective intent. The markets saw a quiet start to the day. However, NIFTY slipped rapidly in the morning session in the first hour while it formed the low point of the day. In a strong show, the index recovered from its low point by afternoon trade and spent the last hour while moving in a limited range. The headline index closed flat with a negligible loss of 13.95 points (-0.08%).
From the technical perspective, the markets are presently consolidating; they have been in consolidating in this way for the last five days in a row. We expect this resilient show to continue. The zone of 17450-17500 is now a crucial area to watch; any sustainable up-move shall occur only above this zone. Until this happens, we will continue to see the key indexes consolidating in this manner. The coming days will continue to see those stocks/sectors that are improving their relative strength against the broader markets.
INDIAVIX rose marginally by 0.59% to 14.0250. NIFTY is likely to see a stable start on Tuesday. The levels of 17405 and 17480 will act as potential resistance points; the supports will come in at 17310 and 17265 levels.
The Relative Strength Index (RSI) on the daily chart is 80.67; it stays in overbought territory. It remains neutral and does not show divergence against the price. The MACD is bullish and above its signal line. A Doji emerged on the candles. This reflects the lack of directional consensus of the participants. However, if we analyze this from a larger perspective, it is more because of the consolidation that is going on in the markets. The occurrences of Doji are also a sign of caution; however, rather than instantly expecting any corrective move, one should wait for a confirmation on the next bar.
In a generally buoyant market like these, Dojis do occur when the markets are consolidating. Such formations do reflect a potential reversal point, but in the present case, they may just be a part of the ongoing consolidation.
All and all, the analysis for Tuesday stays on similar lines; it is recommended to continue staying highly stock-specific while approaching the markets. Shorts should be avoided as the corrections are just intermittent and intraday, and also there is no apparent sign of any weakness or possibility of any correction unless few minor support levels are violated on the downside. It is also suggested to guard profits at current and higher levels. A cautiously positive outlook is advised for the day.
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)
