It was a day of positive consolidation for the NIFTY again; it not only traded in a defined range but also resisted the mentioned levels in the previous technical note. The Indian equities had a negative start to the trade; NIFTY opened lower in line with the prevailing global trade setup. Following a weak start, the NIFTY drifted lower from its opening levels to form a low point for the day in the early minutes of the trade. After that, the index immediately got stable and spent the entire session recovering from its opening low point. However, the last thirty minutes of the session saw the markets slipping in the negative once again. The headline index finally settled with a modest loss of 37.30 points (-0.21%).
We head not only in the weekly options expiry but into the monthly derivatives expiry as well. Given the present technical setup and looking at the Options data for September expiry, it is unlikely that the NIFTY may see any serious drawdowns. The September series expiry has seen a good amount of PUT writing at 17600 and 17650 levels. It is less likely that the NIFTY may slip below 17600 unless there is any large negative factor to deal with. Though large CALL writing was observed at 17800, the highest CALL OI concentration is seen at 18000 levels. Volatility edged higher; INDIAVIX rose 1.63% to 18.8375.
Thursday may see the levels of 17800 and 17865 acting as immediate resistance points for the markets. The supports come in at 17650 and 17600 levels.
The Relative Strength Index (RSI) on the daily chart is 68.67; it has slipped below 70 from an overbought zone. RSI has made a new 14-period low which is bearish. The daily MACD is bearish and below the signal line.
An inside bar occurred on the charts. This happens when the session has a lower high and a higher low.
All in all, the markets continue to stay stock and sector-specific; they will continue staying this way for some more time. The NIFTY has the most immediate resistance near 17800, crossing above that will be a bullish sign. However, there are greater chances that the NIFTY will continue to remain under a broad, but well-defined consolidation. While the NIFTY consolidates, we will also continue witnessing sector-specific moves; it is largely expected that select Banks, Auto, Auto Ancillary, PSE and FMCG pockets perform resiliently under the present circumstances. 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)
