It was a good trending day for the markets as they ended with a decent gain after recovery from an initially weak session. NIFTY saw a positive start to the day, but it soon slipped into the negative territory in the first hour of the trade. As the markets drifted into the negative territory, the weakness intensified as the NIFTY went on to go very close to the 15900 levels. However, the second half of the session saw the markets do a wonderful turnaround; the NIFTY rebounded over 200-points from its low point and closed with a net gain of 144.35 points (+0.90%)
There was a good premium income opportunity on the expiry day. The levels of 15900 and 16200 saw a great amount of Put and Call writing; this ensured that the NIFTY did not slip below 15900 and also did not move past 16200 levels. However, despite such trending moves, the NIFTY continues to remain in the broad trading range of 15700-16400 levels; any sustainable directional bias will be established only after either of these levels is taken out. Until this happens, we will see the NIFTY oscillating in this defined range.
While continuing to stay in this defined range, there are possibilities that the NIFTY may extend its move higher if there are no negative overnight cues to deal with. The levels of 16235 and 16350 will act as potential resistance points. The supports come in at 16080 and 16000 levels.
The Relative Strength Index (RSI) on the daily chart is 43.83; it is an upward rising trajectory, stays neutral, and does not show any divergence against the price. The daily MACD is bullish and trades above the signal line.
A candle with a long lower shadow emerged on the charts. This closely looks like a bullish hammer except that it has a small upper wick, its occurrence after a decline and near a support area may lead to a potential reversal subject to confirmation on the charts.
Overall, it is expected that if there are no overnight cues to deal with, the NIFTY may extend its up move. This may see the markets attempting to test the upper edge of the current broad trading range. In any case, even if there are any corrective moves, shorting the markets must be avoided. So long as the NIFTY is above 15700 levels, all the declines must be used to purchase good quality stocks. A positive outlook 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)
