The expiry day of the weekly options went off quite well on the expected lines. The Indian market ended up on a buoyant note. Despite inheriting weak global overnight cues, the NIFTY saw itself starting the day on a much resilient note. After opening on a flat to mildly positive note, the NIFTY stayed in the positive territory throughout the day. It totally defined the weak early morning cues; after opening positive, the Index just kept getting stronger. The headline index finally ended the day on a strong note gaining 234.75 points (+1.37%).
In the previous technical note, it was mentioned that given the Put writing seen in the 17000-17200 zone, and sustenance of the Index above 17200 may induce more short covering and strong up move. This came in true as the NIFTY opened higher and kept its head above the 17200 for the entire day. Another good point, from the technical perspective, is, that the Index has defended the levels of 100-DMA successfully. This 100-DMA, which presently stays a 17154, remains very crucial support on a closing basis if the markets consolidate again. The options data also suggest the 17000-17150 zone acting as great support for the markets in the near term.
Volatility slipped further; INDIAVIX came off by 6.99% to 18.0875. The market breadth remained strong as just 3 of the NIFTY stocks declined; 47 ended with gains. We can expect Friday to see a stable start to the day with the levels of 17450 and 17500 acting as resistance points. The supports come in at 17330 and 17280 levels.
The Relative Strength Index (RSI) on the daily chart stands at 44.66; it stays neutral and does not show any divergence against the price. The daily MACD Is bullish and stays below the signal line.
A large white body emerged on the candles; this reflects the strong bullish directional consensus of the market participants.
The pattern analysis shows that despite a minor slippage below the 100-DMA on a closing basis, the Index has managed to defend it along the way. This level stays now as crucial support on a closing basis for the near term.
The markets have gotten stock-specific; they are likely to stay this way for some time. There are possibilities that there may not be any sector dominance when it comes to performance; however, we may see stocks from certain pockets like banks, autos, Oil & Gas, energy, and pharma continuing to outperform on a selective basis. We recommend that shorts should be avoided. While keeping new purchases selective, profits should be protected 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)
