The Indian equity markets consolidated for the second day in a row and ended absolutely on a flat note. The markets saw a quiet opening on the expected lines. The Index opened mildly negative but soon crawled inside the positive territory. However, while it traded with modest gains, by afternoon, the Index pared all its gains to slip in the negative zone. The second half of the session saw the NIFTY oscillating in a very defined range. Until the end of the session, no meaningful moves were seen on either side. The headline index ended flat posting negligible gain of just 2.25 points of (+0.01%).
The expiry of the current month’s derivative series went off rather smoothly without any major volatile moves. The strikes of 16700 saw the highest Call OI built up throughout the day. This made sure that the NIFTY finds resistance at that point and saw some retracement from that level. The 16600 offered the highest Put OI concentration which in turn offered support to the Index. The point of 16700 has no become the resistance point of the narrow congestion zone that the markets have created for themselves.
Friday may again see a quiet start to the day. The levels of 16700 and 16785 are likely to act as resistance. The supports may come in at 17600 and 16530 levels.
The Relative Strength Index (RSI) on the daily chart is 71.33; it remains mildly in the overbought zone. RSI, however, is neutral and does not show any divergence against the price. The daily MACD is bullish and trades above the signal line. One more spinning top emerged on the candles. This reflects the indecisive behavior of the markets participants and demonstrates a lack of directional consensus among the players.
All in all, we recommend approaching the markets in the same way it is being suggested over the past couple of days. Broader markets are likely to remain more volatile and may tend to relatively underperform the key indexes.
Further, the Banknifty has not participated at all while the NIFTY piled up its last 1400 points in the up move. It is largely expected that this index is now overdue to track the NIFTY. It is very much likely that the large-cap stocks including banks may relatively outperform the broader markets. We recommend avoiding shorts as the markets are continuing to display strong undercurrents. It would be prudent to keep making selective purchases while vigilantly guarding 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)
