Gemstone Equity Research & Advisory Services

Outlook For Wednesday: NIFTY Likely To Stay In A Defined Range; This Texture May Continue Dominating The Markets

It was a day of a subdued trading for the Indian equities as the markets opened positive but stayed in a range before ending with mild gains. The markets opened on a positive note but soon slipped in the negative territory post opening only to recover and crawl back inside the positive zone. However, the NIFTY failed to make any decisive and meaningful moves in either direction as all up moves stayed capped and much in the defined range. The afternoon trade once again saw the NIFTY paring its gains; the Index recovered again to stay in a range-bound but in the positive zone. The headline index finally ended with a net gain of 45.70 points (+0.31%).

From the technical perspective, despite the attempt to pull back by the markets, the move found resistance at the 50-DMA which presently stands at 14789. The 50-DMA, therefore, remains the important resistance point to watch for the immediate short term. Apart from this, we enter the penultimate day of the weekly options expiry. There was a consistent Put writing seen at 14600 and 14700 strikes. On the other hand, 15000 continues to see maximum accumulation of Call Open Interest for April 08 expiry. Having said this, 14800 also witnessed significant Call writing; the moving past of the NIFTY beyond 14800 would be crucial in the near-term.

The volatility declined a bit with INDIAVIX cooling off by 1.77% to 20.8400. NIFTY is set to see a quiet start for the day; the levels of 14750 and 14815 will act as resistance point; the supports will come in at 14600 and 14565 levels.

The Relative Strength Index (RSI) stands at 48.26; it stays neutral and does not show any divergence against the price. The daily MACD is bearish and stays below the signal line.

The pattern analysis shows that the NIFTY continues to remain in the retracement mode; stays in the falling channel without violating any major levels. Speaking of the short-term, since the Index has slipped below the 50-DMA, it is witnessing resistance at that level on a closing basis.

The texture of the markets is getting evidently defensive as the traditionally safe and low beta defensive stocks like the Pharma, IT and the FMCG have been outperforming the broader markets. Such texture is likely to persist and stay for some more time. Unless the NIFTY can move past 14800 levels, any meaningful up move is ruled out. There are higher possibilities of the markets trading in a defined range.

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)

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