With geopolitical tensions refusing to go away, the equity markets opened on a negative note and continued to end the day with a loss despite recovery from the lower levels. The Indian equity markets opened after a gap of one day; the NIFTY opened lower and continued to get weaker as the day progressed. The markets marked their low point of the day by afternoon. The index tried to stabilize itself after that; it also attempted to recover from the low point. The markets managed to recover over 150-odd points from its low. The headline index ended with a net loss of 187.95 points (-1.12%).
We enter the expiry of the weekly options; the trading range for the day is bound to stay influenced by this. The tensions between Russia and Ukraine continue to persist; this will also have its effect on the global markets. Going by the options data, the maximum Put OI as of now is at 17500; the highest Call OI is seen at 17000 levels. We can fairly imply from this that if there are no fresh overnight negatives to deal with, then there are greater chances that the NIFTY will defend 17500 levels. In other words, the Index’s price action against the levels of 17500 will be crucial to watch.
Thursday is likely to continue to witness a tentative approach from the markets. The levels of 16690 and 16855 will function as probable resistance points. The supports are likely to come in at 16500 and 16410 levels. The trading range is likely to stay wider than usual.
The daily RSI is 39.68; it is neutral and does not show any divergence against the price. The daily MACD is bearish and below the signal line.
A spinning top occurred on the candles which reflected an indecisive behavior of the market participants. Besides this, a bearish Harami also occurred. This happens when the current black body is entirely engulfed by the previous candle. Such a formation occurring following any corrective move indicates a scramble by the markets to find a bottom for themselves. Such a formation is like a “Inside Bar”, this will be confirmed if the high of the previous candle, i.e., 16815 is taken out convincingly.
All in all, as mentioned, unless there is a fresh set of negatives to deal with, the markets are likely to attempt a technical pullback. However, the levels of 16500 need to be closely watched; any significant slip below this will bring in incremental weakness. It is likely that pockets of metals, auto, PSE, and select consumption stocks will continue to relatively outperform the broader markets. It is recommended that shorts must be avoided and fresh purchases should be made in very modest quantities unless a directional bias on the way up is established. A continued cautious approach 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)
