The markets had a fairly stable session on Tuesday as they opened higher and ended the day with a decent gain. On the anticipated lines, the NIFTY saw a positive start to the day. Although the NIFTY traded in a defined trajectory, it kept marking incremental gains throughout the day. The volatility was near-absent all through the session as the markets maintained all their gains throughout the day. There was very mild profit-taking seen in the afternoon; however, that was also swiftly bought into. By the end of the day, the headline index ended the day with a net gain of 147 points (+0.86%).
We enter the penultimate day of the current month derivative expiry; the session is likely to stay influenced by rollover-centric activities. While examining the weekly options data, the levels of 17200 have seen maximum addition of PUT Open Interest; high Put writing at this point shows the expectations of the market participants of this level acting as a support. However, despite the high Put writing at 17200; the maximum Put OI is still seen at 17000 levels. This means that if the NIFTY is able to keep its head above 17200, we may see the up move getting extended. If the index slips below 17200, we may see it taking some breather and consolidating in a defined range.
The Relative Strength Index (RSI) on the daily chart is 55.17; it has marked a new 14-period high which is bullish. The daily MACD is bullish and trades above the signal line. A rising window occurred; this results in a gap on the upside and usually resolves with the continuation of the trend.
Having a look at the pattern analysis reveals that the NIFTY has managed to move past the small trend line pattern resistance that existed near 17200. The index has also moved past the short-term 20-DMA which presently stands at 17161. This means that the NIFTY has successfully navigated the 17150-17200 resistance zone; the key would be to see if the Index is able to keep its head above this zone.
The market breadth remained strong as 48 of the NIFTY stocks ended in the positive territory. For the coming two days, if the NIFTY stays above 17200, we may see the up move getting further extended. Any slip below the 17200 levels will invite some consolidation on the charts. The markets will also continue staying highly stock-specific; some relative underperformance from the financials may persist for some time. The broader markets along with the defensive stocks like IT, Pharma, and select consumption stocks may continue to do well and stay relatively resilient.
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)
