Gemstone Equity Research & Advisory Services

Trade Setup For Monday: NIFTY May See A Tentative Start: Dollar-Play May Take Some Breather

It was a day of consolidation for the markets as the NIFTY consolidated in a defined range before it ended the day with minor gains. After a modestly negative opening, the index soon recovered to trade flat. Despite moving in the positive territory for a brief time on a couple of occasions, most of the day was spent in the negative zone. In the last hour of the trade, the markets moved again in the positive territory and managed to end the day with minor gains of 13.90% (+0.12%).

The emerging markets are also witnessing the “Dollar-play”. The recent sharp decline of the US Dollar has benefited the emerging markets, per se. This dollar play might take some breather as the Dollar Index is expected to pullback a bit after as support and a bullish divergence from a lead indicator. This may also see Asian markets taking some breather and India can be no exception. If the Indian equities trade in a range, or see some continued consolidation, this should not come as a surprise. 

Monday is likely to see a tentative start to the day. The levels of 11250 and 11285 will act as resistance. The supports will come in at 11150 and 11065 levels.

The Relative Strength Index (RSI) on the daily chart is 62.67; it stays neutral and does not show any divergence against the price. The daily MACD remains bearish; it trades below its signal line. Apart from a small white body that was formed, no important formations were noticed. 

NIFTY has continued to stay in a range, well placed exactly in the middle of the rising channel that it is trading into at present. The lower rising trend line of the channel also has the 200-DMA very near to that. This 200-DMA, which is 10850 at present, is the nearest and one of the important support for the markets in the near term.

Markets will continue to display stock-specific behavior on the broader landscape. This will see certain pockets performing better than the other. However, if the current buoyancy of the markets is because of any dollar-advantage, this is expected to take some breather. We reiterate continuing to follow the uptrend, if it continues, with a light exposure with focus on protection of profits at higher levels.

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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