For the second day in a row, the Indian equity markets tried hard to stabilize; they opened on a much resilient note, traded in a range, and ended the day with a modest loss. The markets saw a much better and resilient opening to the trade and spent the morning session trading in a sideways trajectory. It gained some strength in the afternoon and maintained modest gains. However, the last hour of the trade saw some corrective moves happening in the markets. The NIFTY pared its gains and slipped into the negative. After a modest recovery, the headline index closed with a modest loss of 61.80 points (-0.38%).
From a technical perspective, it is a good sign that the NIFTY has defended the previous low; in a way, it has validated the support trend line seen on the chart. Also, if the NIFTY is able to make some technical pullback, it may well have placed some potential bottom in place. For the immediate short term from hereon, it would be extremely crucial for the NIFTY to defend the 16000-16150 support zone to avoid any incremental weakness. Volatility inched a little higher; INDIAVIX was up by 1.23% to 22.3025.
Wednesday is likely to see the levels of 16300 and 16410 acting as potential resistance points. The supports come in at 16180 and 16100 levels.
The Relative Strength Index (RSI) on the daily chart is 32.85; it remains neutral and does not show any divergence against the price. The daily MACD is bearish and stays below the signal line. A Doji emerged on the candles; the occurrence of such a candle near the support area hints at a potential bottom. However, any candle must not be traded in isolation, and one must look out for confirmation on the charts going ahead.
The analysis for the coming session remains more or less on similar lines. It would be crucial to focus on the lower levels; it would be important for the NIFTY to hold on to the support zone of 16050-16150. Apart from this, it is also expected that the midcaps may see some relative outperformance against the large caps. Overall, the markets may remain highly stock/sector-specific in nature. It is expected that we see traction in IT, Pharma, Consumption, and select midcap stocks. It is recommended that so long as the NIFTY is above 16000 levels, shorts much be strictly avoided. A selective 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)
