In the previous technical note, it was mentioned that the NIFTY’s price behavior against the 17300 levels will decide the trend; any move higher than that point will help NIFTY surge higher. The NIFTY saw a strong start to the day. It opened higher and got stronger as the day progressed. The opening of the NIFTY was above the 17300-levels; it stayed above this point for the entire day. The NIFTY had pared some of its gains in the afternoon, but by the end of the session, it was able to pile up some more gains. It finally ended with a net gain of 197.05 points (+1.14%).
As we approach Thursday, we will have two things to watch that the markets will react to. First, there is weekly options expiry coming up; and second, we also have RBI Monetary Policy lined up for Thursday. The general consensus expectation of the markets is that the RBI may high the Reverse-Repo Rate. Apart from this, the markets will also stay governed by the weekly options-led activities. The 17300 has seen some significant amount of call unwinding taking place; on the other hand, maximum Call OI has shifted higher to 17700. This means that the NIFTY has tried to create some more room for itself on the upside.
Thursday is likely to see the levels 17535 and 17630 as immediate potential resistance points. The supports come in at 17400 and 17340 levels.
The Relative Strength Index (RSI) on the daily chart is 48.52; it continues to remain neutral and does not show any divergence against the price. The daily MACD stays bearish and below the signal line.
A Rising Window emerged on the candle. This results out of a gap on the upside; in all likelihood, such formations on the candles resolve in the direction of the trend. This would, however, require confirmation on the next trading day.
The NIFTY has halted its up move near the 50-DMA which is presently at 17455. If the markets are able to sustain above this point for long, there are higher chances that the NIFTY inches higher towards the 100-, and short-term 20-DMA which lay very close to each other at 17642 and 17640 respectively.
All in all, once again, the behavior and the intraday trend of the markets will be governed by the price action of NIFTY against the zone of 17350-17400 levels. If the NIFTY is above to keep its head above this zone, one can safely expect the markets to put on some more incremental gains. If the zone gets violated, then we may again see the markets getting pushed into a consolidation phase. The present technical setup suggests bigger possibilities of either ranged consolidation or the continuation of the up move. There are very few chances of any major corrective move happening in the next session. It is recommended to avoid creating shorts, wait for the markets to create some directional consensus after the RBI policy and then some select purchases may be made. A cautiously optimistic 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)
