On the much-anticipated lines, the equity markets took a breather after strong moves over several days and ended the day with a loss. There was also the weekly options expiry that the markets dealt with; the session remained influenced by the options expiry and this dominated the intraday trend for the markets. Following an overnight weak global trade setup, the NIFTY opened with a gap down and kept marking gradual lows until the afternoon. It tried recovering from the low point of the day. However, no meaningful recovery was seen. The headline index ended the day with a net loss of 179.35 points (-1.00%).
The maximum Call OI stood tall at 17800 levels throughout the day. This ensured that despite the recovery, the NIFTY did not move past this level and settled below this point. The NIFTY had ended above the upper Bollinger band; Thursday’s session has just pulled the index inside the band again. However, it still remains comfortably above all its key moving averages with major supports existing near 17500 for the near term. Over the coming days, as per the options data, NIFTY will continue to find resistance at 18000 levels. This means that some ranged consolidation in the markets is likely to continue which will be, in fact, healthy for the markets looking at the great run that it has had over the past days.
Friday is likely to see the levels of 17800 and 17865 acting as resistance points. The supports come in at 17700 and 17610 levels.
The Relative Strength Index (RSI) on the daily chart is 59.67; it remains neutral and does not show any divergence against the price. The daily MACD is bullish and trades above the signal line. A spinning top occurred on the candles. Such candles occur when there is little difference between the open and the close price for the day.
The analysis for Friday remains on many similar lines. The markets have had a great runup in form of a remarkable technical pullback. Given this fact, it should not come as a surprise to us if we see the markets undergoing some ranged consolidation in the immediate near-term. If the NIFTY consolidates, in fact, that will make the recent run-up more sustainable and healthy.
Also, as expected, there was no sectoral dominance seen in the markets. The coming session will also not see any particular sectoral dominance; the participation is likely to remain overall broad-based. We recommend avoiding to short the markets and using all such downsides that result out of consolidation moves to make select purchases while vigilantly protecting profits 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)
