The Indian equities had a strong run on Thursday, the last trading day of the shortened week as they opened with a gap, maintained their gains, and ended the day on a very strong note. The NIFTY saw a gap-up opening on Thursday and kept marking incremental highs throughout the day. The Index peaked in the late afternoon trade after it reported its day’s high at 17344.60. It continued to broadly maintain the gains; however, it came off mildly from the high point. The headline index closed on a strong note while posting gains of 311.70 points (+1.84%).
The Indian markets will open after a gap of one day; Friday was a trading holiday on the account of Holi. While the markets have ended near their high point, they are once again slated to open on a higher note on Monday as they align to the global trade setup. The NIFTY has shown a technical pullback of over1600-odd points in nine sessions; although a strong opening is imminent on Monday, some consolidation at higher levels cannot be ruled out. It may so happen that if the NIFTY see a gap-up opening, it may spend the rest of the day seeing mild profit-taking and consolidating in a broad range.
Volatility continued to slide; INDIAVIX slipped 6.25% 22.6100. Monday is likely to see the levels of 17380 and 17490 acting as probable resistance points. The supports come in at 17180 and 17080 levels. The trading range for the markets is likely to stay wider than usual.
The Relative Strength Index (RSI) on the daily chart is 57.20; it remains neutral and does not show any divergence against the price. The daily MACD is bullish and remains above the signal line.
A rising window emerged on the candles. This essentially results out of a gap on the upside and resolves in the direction of the trend. However, that would require confirmation on the next bar.
The weekly options data suggests that the highest Call OI accumulation is seen at 17300 levels; however, the second-highest Call OI is seen at 17500. This can fairly mean that even if we see a gap-up opening the markets will find a strong resistance near 17500 levels and this is the point from where we are likely to see the onset of consolidation. Apart from this, the 100-DMA which is presently at 17380 which can at as a potentially strong resistance for the NIFTY on a closing basis. It is recommended to use all further up moves to protect 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)
