It was a tepid session for the Indian equity markets as the NIFTY stayed in a capped range before ending the day with a modest decline. The markets had no negative overnight cues to deal with; they opened on a stable note on the expected lines. The index opened on a modestly positive note but soon slipped into negative territory. By afternoon, the markets managed to crawl back into the positive territory. However, the recovery was not sustained; the index slipped again into the negative zone. The benchmark index finally closed with a modest cut of 89.55 points (-0.55%).
The analysis for Wednesday remains much on similar lines. If there are no major overnight negative cues to deal with, the markets may find themselves opening once again on a stable note. Apart from this, we also step into the penultimate day of the expiry of the current-month derivative series; the session will remain dominated and influenced by the rollover-centric activities. The upsides may be capped near 16300; any move above 16300 may fuel some short-covering again in the markets. Until that happens, we will continue to see the level of 16300 offering stiff resistance to the markets.
Wednesday is likely to find the levels of 16210 and 16300 acting as immediate resistance points. The supports come in at 16030 and 15960 levels.
The Relative Strength Index (RSI) on the daily chart is 42.01; it stays neutral and does not show any divergence against the price. The daily MACD is bullish and stays above the signal line. A black-bodied candle appeared on the charts; no other formations were noticed.
The pattern analysis shows that the most recent price action has seen the NIFTY creating a trading range between 16400 and 15700; the NIFTY’s price behavior against the range will decide the directional move in the near term. In other words, no directional move on the upside or downside is likely unless the levels of 16400 are taken out or 15700 are violated. The reason behind the levels of 16400 acting as stiff resistance is the gap that exists between 16400 and 16650 levels.
All in all, going by the overall options data, the markets may have their upsides capped in the range of 16300-16400; also, there are possibilities that the markets may remain highly selective and stock-specific. The shorts continue to exist in the system; shorting the markets in the current scenario is unlikely to provide any favorable risk-reward preposition. A continued cautious approach while staying light on overall exposure 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)
