After two days of consolidation, the equity markets finally resumed their up move as it not only prepared some ground to resume its up move but also ended the day on a positive note. The markets saw a weak opening following mildly negative global cues. However, the NIFTY opened on a much resilient note and marked the low point of the day in the opening minutes of the session. The index inched higher and recouped all its opening losses by late afternoon trade. It stayed in an upward rising trajectory throughout the day and kept marking incremental high points. Though it stayed sideways during the last half hour of the session but largely maintained the gains. The headline index closed with a net gain of 105.25 points (+0.64%).
It was the weekly options expiry and it went well on the expected lines. The markets picked up steam the moment it was above 16500; this level continued to see high put wiring activity during the day. Moving on from here, the NIFTY is near the upper edge of the consolidation; any move above 16700 will propel the markets higher. So long as the NIFTY is below 16700, it will stay in the broad 16400-16700 congestion zone and will trade with positive bias but will refrain from taking any sustainable directional bias.
Friday is likely to see a stable start; the levels of 16700 and 16765 will act as immediate resistance points. The supports come in at 16550 and 16480 levels.
The Relative Strength Index (RSI) on the daily chart is 53.31; it shows a mild bullish divergence against the price. The daily MACD is bullish and remains above the signal line. A bullish engulfing candle emerged on the charts; it may act as a potential onset of resumption of the up move for the NIFTY subject to confirmation.
The pattern analysis shows that the NIFTY got a breakaway gap above 16400; however, after that, it consolidated in a narrow zone and saw a classical throwback. It tested the levels from where it had broken out and it has tried to resume to up move. It has resistance near 16700; any move above that will propel the markets higher.
All in all, the analysis remains on similar lines; if the markets have some mild profit taking or remain weak if weak global cues affect them, it is strongly recommended to refrain from creating fresh shorts. All dips, if any, must be used to make select purchases. While continuing to adopt a selective approach in the markets, profits too must be protected d at higher levels unless the level of 16700 is taken out comprehensively.
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)
