Caution weighed heavy on the markets ahead of a long weekend as well as FOMC outcome as the Index ended the day on a sluggish note. Markets saw a stable and positive start to the day. The NIFTY opened higher and went near to the 18000 levels once again. However, after protecting the gains in the morning session, the markets gradually gave up their opening gains to slip into the negative zone. There was a recovery in the afternoon which saw the Index recouping its losses to trade flat once again; this recovery was not sustained and the NIFTY went on to end the day with a net loss of 59.75 points (-0.33%).
Thursday has a token and symbolic one-hour Mahurat Session. The weekly options expiry happened on Wednesday; given the highest Call OI at 18000, NIFTY was not able to go past this point. Importantly, we will have Federal Reserve’s outcome slated to come later tonight. Markets will react to that in the morning. Assuming there are no negative reactions to deal with, the markets are likely to see a ranging session with limited downsides. As per options data, there are fewer chances of NIFTY slipping below the 17800 levels.
Thursday will see the levels of 17900 and 17945 acting as resistance points. The supports come in at 17800 and 17730 levels.
The Relative Strength Index (RSI) on the daily chart is 51.05; it is neutral and does not show any divergence against the price. The daily MACD is bearish and stays below the signal line.
A candle with a long lower shadow occurred. It has occurred near a pattern support area; the emergence of such a candle near the support may act as a reversal point for the markets. However, this will require confirmation on the next trading day.
The volumes will obviously remain less as this will be a short session. Such sessions just invite token and symbolic participation from the market participants. Unless there are any major negative points to deal with, the markets usually trade with a bullish undertone. We recommend avoiding committing any major positions unless the markets start digesting the Fed’s outcome from Monday onwards. We also suggest continuing to stay stock-specific in the approach, avoid shorts, and use downsides to make highly selective purchases.
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)
