The equity markets traded very much on the anticipated lines; it avoided any major extension of the up move and at the same time it resisted to key levels on the charts. The NIFTY saw a positive start to the day; however, after opening on a positive note, the NIFTY drifted in the negative zone by late morning. A strong recovery followed which not only took the markets back in the green but also took it near to its key resistance area. Unfortunately, the recovery was not sustained; the NIFTY pared all its gains to slip in the negative territory again. The headline index finally ended with a nominal loss of 30.25 points (-0.17%).
The NIFTY has moved exactly within the levels expected; on the upside, it has resisted the 50-DMA which presently stands at 17468. On the higher side, with the 100-DMA at 17628, this makes the 17500-17650 zone a very stiff resistance area for the markets to navigate over the coming days. We have weekly options expiry lined us as well; though 17500 continues to have the maximum Call OI. The highest Put OI is at 17000. So, we are likely to have markets that will continue finding themselves in a broadly defined range for some time.
Volatility remains unchanged; INDIAVIX came off by 0.10% to 20.5925. Thursday is likely to see the levels of 17400 and 17465 acting as resistance points. The supports come in at 17280 and 17190 levels.
The daily RSI is 47.49; it stays neutral and does not show any divergence against the price. The daily MACD is bearish and remains below the signal line. A Spinning Top emerged on the candles; this is a candle with a small real body and reflects a lack of directional consensus among the market participants.
The markets are also likely to react to the FOMC minutes; apart from this, the decrease in geopolitical tensions between Russia and Ukraine remains debatable. Amid this technical setup, it is best advised to refrain from taking any aggressive position on either side. Any exposure, long or short, must be kept at modest levels. Profits on either side must be vigilantly protected. It is advised to avoid highly leveraged exposures and adopt a highly selective and cautious outlook 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)
