In a disappointing session, NIFTY did not extend its up move despite trading in a range in the first half of the day. The markets had closed just at its pattern resistance as evident from the chart. The NIFTY opened positive and got stronger on the expected lines. However, it soon marked the high point in the early minutes of the trade. The opening gains were gradually pared in the first hour of the session as the NIFTY slipped in the negative territory. The weakness intensified for the rest of the day and the headline Index went on to end with a cut of 204.95 points (-1.18%).
Speaking from the technical perspective, the NIFTY has once again revisited the 100-DMA which presently stands at 17168. Not only for Monday, but throughout the week, NIFTY will have to keep its head above the 100-DMA on a closing basis. Any slip below this will invite incremental weakness for the markets. On the higher side, looking in tandem with the higher time frame charts, the zone of 17260-17400 makes a stiff resistance zone for the markets. Volatility increased a bit; INDIAVIX climbed 2.03% to 18.4550.
Monday may see a jittery start to the day. The price behavior of the NIFTY against the levels of 100-DMA will be crucial to watch. The levels of 17260 and 17330 will act as potential resistance levels for the markets. The supports come in at 17150 and 17030 levels.
The Relative Strength Index (RSI) on the daily chart is 40.31; it is neutral and does not show any divergence against the price. The daily MACD is bearish and below the signal line. However, the narrowing of the Histogram suggests that the downside momentum may be decelerating.
The pattern analysis shows that the price measurement targets that arose following the bearish Head & Shoulders formation have been closely achieved. The NIFTY has managed to climb above the 100-DMA after a violation; however, since it has visited that levels again, defending them becomes more crucial and important.
All and all, NIFTY may be in the process of finding a base for itself; however, it has not completed that process. It is recommended to continue avoiding large exposures. The stock-specific fabric of the markets will continue to persist for some more time. It would be a prudent approach to approach the markets while keeping exposures at modest levels while adopting a highly selective with a cautious view on the markets.
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)
