After taking a breather for two days, the equity markets resumed their up move to move towards its critical resistance points as it ended the day on a strong note. The Indian equities saw a gap-up opening and maintained their gains throughout the day. The NIFTY continued to mark incremental highs during the session. There was no visible volatility in the trade; the markets showed no intent of any profit-booking at any point in time. Following a steady trending day, the headline index ended the day with a strong gain of 190.60 points (+1.07%).
The NIFTY has ended at the crucial 18000 level; the highest Call OI has shifted to 18500 levels. However, the second-highest, and almost similar to the highest Call OI exists at 18000 levels. This makes the level of 18000 a deciding level that would dominate the trend for the coming days. If the NIFTY is able to move past 18000 is is all set to add further gains to its tally. If the NIFTY resists to 18000, it may still consolidate in a broad but defined range. The behavior of the Index against the level of 18000 will be crucial to watch not only for tomorrow but also over the coming days.
The markets are set to see a modestly negative start to the day. While expecting a negative start, the levels of 18000 and 18165 will act as potential resistance points. The supports will come in at 17910 and 17830 levels.
The Relative Strength Index (RSI) on the daily chart is 67.77; it has marked a new 14-period high which is bullish. The RSI remains neutral and does not show any divergence against the price. The daily MACD is bullish and trades above the signal line. Apart from a white body that emerged, no other formation was noticed on the charts.
All in all, if the NIFTY opens below the 18000 levels, this point is likely to act as resistance for the markets. For any further sustainable extension of the move on the higher side, moving past and staying above this level will be extremely crucial. Until this happens, we will see the markets continuing to consolidate a bit more in a defined range.
We are also not expected to see any sectoral dominance in the markets. The broader markets are performing well; we will continue to see stock-specific performance across the board regardless of the sector that belongs to. Given the global trade setup, relative outperformance in Metals, Financials, select Autos, and Midcaps will continue. In the event of any downsides, it is recommended that it should be used to make select purchases. While avoiding shorts, a cautiously positive outlook is advised for the day.
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)
