The Indian equity markets put up a rock-solid show once again as it not only staged a fresh breakout but also scaled and closed at new lifetime high levels. In a relatively less volatile session, the NIFTY opened on a modestly positive note and marked its low point of the day in the early minutes of the session. Throughout the session, the index stayed in the positive zone and in an upward rising trajectory. At no point in time, did the markets showed any sign of weakness or profit-taking. NIFTY was successfully able to keep its head above the crucial 18000-levels. It finally ended on a decently positive note piling up 169.80 points (+0.94%).
We not only step into the weekly options expiry on Thursday, but it is also the last trading day of the current week. Friday is a trading holiday on account of Dussehra. The options data have shown steady and significant call writing at 18000, 18050, and 18100 levels. While maximum Call writing happened at 18100 in the previous session, the strikes of 18000 continue to hold maximum Put OI concentration indicating very strong support for the day. On the other hand, 18200 holds maximum Call OI accumulation followed by 18300 and 18500 levels. The behavior of the markets at 18200 will decide the trend for the day.
Thursday is likely to see a steady start for the day; the levels of 18200 and 18295 will act as immediate resistance points. The supports come in at 18100 and 18030 levels.
The Relative Strength Index (RSI) on the daily chart is 72.06. RSI is mildly overbought but also neutral as it does not show any divergence against the price. The daily MACD has shown a positive crossover; it is now bullish and above the signal line.
A rising window occurred on the Candles; it has resulted because of a gap up. Given the breakout, the current bar is also a break-away gap on the charts. Usually, such formations resolve with the continuation of the current trend on the upside.
The trends in the markets are very much on the expected lines. It was mentioned in the previous note that the sectoral outperformance will continue. It played out exactly like that as the Auto, PSE, Banks, and other select midcaps showed strong performance. This type of setup will continue playing itself out in the near term. The analysis for the next day remains much on similar lines. It is recommended to avoid shorts as there is no sign of any weakness. However, on the other side, it is also suggested to keep new purchases limited to only those stocks that are defensive in nature with improving relative strength. While keeping strict trailing stop-losses in place, a cautious 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)
