The Indian equities had a remarkable turnaround from the low point of the day as they ended the day on a decently positive note. The markets witnessed a modestly negative start; the weakness increased in the late morning trade when the NIFTY drifted to almost 17000 levels. However, after that, in the second half of the session, the markets were able to recoup all its losses to come back inside the positive territory. Not only this, but the index also continued putting on weight as it rebounded over 325-points from the low point of the day. The benchmark index ended with a decently strong gain of 197.90 points (+1.16%).
The 200-DMA has turned out to be crucial support for the markets on the expected lines. The low point of the day was 17006; the 200-DMA presently stands at 17013. The NIFTY has once again ended just below the 100-DMA which is at 17360. As mentioned, in the previous technical note, the NIFTY has created a small trading range or more of a congestion area between 17000-17300 levels. We will find NIFTY resisting the 100-DMA; a sustainable resumption of the rally will occur only if the NIFTY moves past 100-DMA convincingly. The Options data suggest high Put writing at 17000 strikes; this fairly suggests that there are fewer possibilities of the markets going below this point before this week’s expiry. The maximum Call OI concentration has shifted higher to 17800 levels.
Wednesday is likely to see the levels of 17390 and 17500 acting as potential resistance points. The supports come in at 17210 and 17060 levels.
The Relative Strength Index (RSI) on the daily chart is 57.03; it stays neutral and does not show any divergence against the price. The daily MACD is bullish and above the signal line.
The risk-on technical pullback was evident in the markets; while the high beta economy-facing stocks did well, defensive stocks like FMCG, Consumption, and Pharma did not do well. Despite the current technical pullback, it would be necessary for the NIFTY to move past the 100-DMA which is still an important resistance on a closing basis. Moving past this level which is at 17360 convincingly on a closing basis will be required for a sustainable up move. We will see NIFTY moving higher if this level is taken out with force. It is recommended to continue approaching the markets in a highly selective and stock-specific way while also continuing 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)
