The Indian equity markets traded much stronger than expected on the weekly options expiry day. They not only stayed resilient as compared to their global peers, it went on to add incremental gains to end at yet another lifetime high level. The NIFTY saw a quiet start to the day. After trading with minor gains in the opening trade, it slipped momentarily in the negative zone as it marked the low point of the day. It soon crawled back inside the positive territory. The index kept rising as it stayed in an upward rising trajectory throughout the day. It also managed to move past the 17600 levels and stay above that. The benchmark index finally ended with a decent gain of 110.05 points (+0.63%).
The notable thing during the session was a very high amount of Put writing that was seen at 17500 and 17600 levels. This speaks volumes with regard to the internal strength that the markets are showing. The major highlight of the day of absolute outperformance of the BankNIFTY index. The Banknifty marked its lifetime high of 37720; while doing so it moved above its previous high point of 37708 formed in February. It is also important to note that when BankNIFTY marked its prior high of 37708 on the 16th of February 2021, NIFTY had made a high of 15431. While the Banknifty tested those levels today, NIFTY has already soared over 2200-points above its own high.
The volatility increased; the INDIAVIX surged 4.97% to 14.4125. NIFTY may see a quiet start to the day; the levels of 17650 and 17700 may act as immediate resistance points for the markets. The supports come in at 17560 and 17500 levels.
The Relative Strength Index (RSI) on the daily chart is 85.60; it remains in the overbought zone. It also remains neutral as it does not show any divergence against the price. The daily MACD is bullish and trades above its signal line. A strong white candle appeared; it marked a follow-up up move after the previous day’s gain by the NIFTY.
All in all, the markets show tremendous internal strength; at the same time, we cannot overlook the fact that it is a bit overextended on the charts. Since there is no sign of any tiredness or exhaustion in the markets as yet, shorts should be avoided. However, in the same breath, chasing up-move must be done in a very cautious way. While staying highly stock-specific as always, profits are supposed to be guarded at each incremental level. The focus is now likely to shift to select Auto, Banks, PSE, and Realty Stocks while the overall markets may remain highly stock-specific. 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)
