Gemstone Equity Research & Advisory Services

Outlook For Wednesday: While NIFTY Consolidates, This Zone Represent Resistance Area For The Near Term

Following a very volatile first day of the week, Tuesday’s session was quite an antidot to the previous session. The Indian equity markets consolidated amid a limited and ranged movements while resisting to key levels and ended the day on a flat note. NIFTY opened on a mildly negative note but soon crawled in the positive territory in the first few minutes of the trade. After that, the index saw limited upsides and resisted near the 12000 levels. From there, the NIFYT pared all its gains to dip in the negative zone. After that, the headline index went on the end on a flat note with negligible gain of 3.55 points (+0.03%).

The markets have resisted to the 12000 levels once again and have stayed below that. This level continues to hold maximum concentration of Call Open Interest as of now; this indicates likely strong resistance at this point. Along with the 12000 level, the 11950 level also witnessed good amount of call writing. This makes the zone of 11950-12000 a resistance is for the NIFTY from the short-term perspective. The volatility index INDIAVIX cooled off by 1.95% to 20.7150.

Wednesday is likely to see a tepid start with the levels of 11980 and 12020 acting as resistance points. The supports come in at 11880 and 11810 levels. In the event of any corrective move, the trading range is likely to get wider than usual.

The Relative Strength Index (RSI) on the daily chart is 68.55; it stays neutral and does not show any divergence against the price. The daily MACD is bullish and trades above the signal line. A Doji emerged on the candles. It depicts an indecisive session and often potentially acts as a disruptor of the uptrend if it appears after an up move.

Overall, the markets are showing distinct signs of fatigue at current levels. The zone of 11950-12000 is a potential resistance zone as indicated by the weekly options data. While the IT pack continues to outperform, Pharma appears to be taking a breather. The actions in the markets has got highly stock-specific, and it is likely to remain like this for the immediate short term. We recommend avoiding excessively leveraged exposures and approach the markets with cautious approach for the day.

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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