In the previous technical note, it was mentioned that the NIFTY faces resistance in the 17150-17200 zones in form of the short-term 20-DMA as well as a small pattern trend line. It was imperative for the index to move past this zone for an extended up move. On the anticipated lines, the Indian equity markets resisted this zone and ended with a modest cut on the last trading day of the week. After a positive start on Friday, the NIFTY soon slipped in the negative territory after marking the day’s high in the early minutes of the trade. The weakness persisted until afternoon; after that, the markets attempted to recover its day’s losses. At one point in time, NIFTY had almost recovered the day’s losses. However, after giving up some recovery, the headline index ended the day with a net loss of 68.85 points (-0.40%).
As we step into the last week of the calendar year, it is also a week of monthly derivatives expiry. Apart from this, major global markets on holiday will impact the participation in the domestic markets as well due to the lack of any meaningful cues. Having said this, the 20-DMA is at 17147 presently and the trend line pattern resistance is at 17155. This makes the 17150-17200 zone a major resistance area for the coming days. Unless the index moves past this point, we will see the markets finding resistance and consolidating near these levels.
Monday is likely to see a quiet start for the day. The levels of 17085 and 17140 as immediate resistance points for the markets. The supports come in at 16960 and 16880 levels.
The Relative Strength Index (RSI) on the daily chart is 43.67; it stays neutral and does not show any divergence against the price. The daily MACD is bearish and below the signal line. However, the narrowing slope of the Histogram, it is seen moving towards a positive crossover over the coming days.
A bearish engulfing candle emerged on the candles. This has emerged near the resistance zone of 17150-17200; this makes this zone all the more important for the markets in the near term.
It is reiterated that it is unlikely that the markets may have any major directional move on the downside. If at all some tepid behavior of the markets persist, it will largely keep the index within a broad trading range. In the same breadth, we will also not see any major directional up move unless NIFTY moves past the 17150-17200 zone convincingly. Until the markets move past this zone, it is strongly recommended to keep exposures at modest levels while keeping purchases limited to defensive and low beta stocks.
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)
