Gemstone Equity Research & Advisory Services

Friday Trade Setup: While NIFTY Stays In A Range, It Keeps This Resistance Zone Intact

The RBI’s Policy Review and the weekly options expiry, both played a significant role in infusing wide ranged moves in the equity markets. The Indian equities got a better than expected start to the day but stayed range-bound until afternoon after which it reacted to the RBI Policy. The NIFTY rose over 150 points from the previous close and came off over 155 points from the high point of the day. However, it managed to recover before it ended the day with a net gain of 98.50 points (0.89%).

The session remained thoroughly dominated by the weekly options expiry. The levels of 11200 had highest Call OI concentration for most of the day. Maximum PUT OI concentration at 11100 ensured NIFTY rebounding from those levels. Overall, the RBI policy remained a non-event and much on the expected lines and this failed to cheer the markets on that front. Despite such wide ranged moves, the volatility decreased as the India Volatility Index, INDIAVIX, came off by 1.80% to 23.1425.

Friday is likely to see a tentative start to the day.  The levels of 11245 and 11285 will act as resistance points. The supports come in at 11110 and 11045 levels.

The Relative Strength Index (RSI) on the daily charts 62.27; it is neutral and does not show any divergence against the price. The daily MACD is bearish as it trades below its signal line. 

Thursday’s session was yet another session where a Spinning Top occurred on the candles. Such sessions often denote lack of consensus among the market participants and have a small difference between the opening and the closing prices regardless of the intraday range.

The inability of the NIFTY to sustain at higher levels shows the lack of comfort at a higher level. This is also evident from the market breadth which has not been so strong as compared to the kind of up moves the markets have seen. Amid such a technical setup, the zones of 11300-11350 continue to remain strong resistance zone. No sustainable up move shall occur unless the NIFTY is above to move past these levels convincingly. We reiterate to approach the markets keeping this in mind in a cautious manner. 

Milan Vaishnav, CMT, MSTA
Consulting Technical   Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK)  | (Research  Analyst, SEBI Reg. No. INH000003341)

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