On a day that stayed technically important, the NIFTY marked a fresh lifetime high point again as it took out its earlier intraday high. Following a tepid start on the expected lines, the markets opened flat and slipped in the negative territory for a very brief period in the initial minutes of the trade when it marked its low point of the day. After immediately crawling back inside the green, the index grew stronger in the morning trade. NIFTY not only moved past the previous high point, but it also went past the psychological 18000-mark. The markets pared their gains in the second half of the day but still managed to close at their lifetime high levels on a closing basis with gains of 50.75 points (+0.28%).
NIFTY has ended just at its previous high point of 11947; it has attempted a breakout by testing the incremental high of 18041. However, it is important to note that the breakout has been attempted but not yet confirmed. A breakout shall happen when the NIFTY keeps its head above 17947 and subsequently move past 18000 levels convincingly. The options data present an interesting picture. While the 18000 levels continue to have the highest accumulation of Call OI, the very same level of 18000 also saw the highest amount of PUT writing taking place. This speaks of the inherent strength of the markets. If the NIFTY stays above 17950 for long, it may see another thrust of up move.
The levels of 18000 and 18090 are likely to act as potential resistance points. The supports come in at 17880 and 17850 levels.
The Relative Strength Index (RSI) on the daily chart is 67.20; it shows a mild negative divergence against the price. The daily MACD is bearish and stays below the signal line. However, the narrowing slope of the Histogram hints at the return of momentum with any thrust on the upside. No major formations were noticed on the candles.
The highlight of the previous session of a stark sectoral outperformance from the Banking, Auto, and the PSU stocks along with isolated outperformance among broader markets and power companies. Such stock-specific performance will continue in the markets for the coming days as well. We recommend avoiding shorts because even if any consolidation occurs, that will be a sign of strength. There are no technical signs in the markets that hint at an impending larger corrective move as of now. Looking at the present technical setup, we recommend continuing to make selective purchases along with protecting profits at higher levels.
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)
