It was a lackluster day for the Indian equity markets as they chose to continue to consolidate before ending the day with a modest loss. The NIFTY saw a positive and stable start to the day. Until late afternoon trade, the Index stayed in the positive territory. It did not take any directional cue but protected its modest gains while trading sideways in a defined and capped range. It was the last hour and a half of the session that saw some profit-taking bout affecting the markets. The NIFTY slipped in the red and tested its key support levels. The headline index finally ended with a net loss of 57.45 points (-0.31%).
We will have an expiry of the weekly options coming up on Thursday and also the monthly derivatives expiry of the current month series. The present technical setup as well as the options data shows that the markets will remain influenced by the rollover-centric moves. The weekly options data shows a good amount of Call writing taking place between the strikes of 18300 and 18500 with the strikes of 18300 holding the highest Call OI followed by 18500 levels. This means that the 18300 level will continue to pose resistance to the Index unless taken out comprehensively. On the other hand, 18000 holds maximum PUT OI followed by 18200 levels. This means that we are likely to have a range-bound session ahead of us unless 18300 is taken out.
Thursday is likely to see a stable start once again to the day. The levels of 18300 and 18355 will act as immediate resistance points. The supports come in at 18150 and 18020 levels.
The Relative Strength Index (RSI) on the daily chart is 61.85; it is neutral and does not show any divergence against the price. The daily MACD is bearish and stays below the signal line.
The pattern analysis shows that the NIFTY is within the well-defined trading range of 18000-18600 levels. So long as NIFTY stays above 18100-18150 levels, it will continue seeing technical pullbacks from lower levels. On the upside, it has strong resistance in the 18500-18600 zone.
The market breadth is stable. Although it is definitely not as strong as it should be, it is not so weak either. Volatility changed little; INDIAVIX rose by 0.44% to 16.8275. As we deal with the monthly derivative expiry tomorrow, some volatility in the session cannot be ruled out even if the markets stay within the broad range. We recommend avoiding excessively leveraged positions, long or short unless some directional cue on either side is established. From the technical setup that is seen currently and with analyzing the Options data, there are high chances that NIFTY will continue finding supports close to 18000 levels. 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)
