Gemstone Equity Research & Advisory Services

Tuesday Trade Setup: NIFTY Set To See A Positive Start; Behavior Against This Price Zone Crucial

Following three days of corrective action, the last day of the trading week was that of a less volatile nature. On the anticipated lines, the markets did see a technical pullback and ended the day with gains. The NIFTY saw a positive start to the day given the aid of favorable trade setup. Though the opening gains were given up in the first hour of the trade, the remaining part of the session was spent with the NIFTY staying in the upward rising trajectory. Though the markets came off a bit from its highest point, the headline Index ended the day with a net gain of 182.40 points (+1.27%).

The Indian markets will open following an extended weekend with Monday being a trading holiday on account of Holi. The NIFTY will adjust itself with the global trade setup which stays positive and bullish. The current trade setup, unless damaged, will cause the NIFTY to see a gap-up opening on Tuesday. However, it is important to note that the expected quantum of the gap-up opening will see the NIFTY opening near its crucial resistance level of 50-DMA which presently stands at 14764. The opening levels and the behavior of NIFTY against the zone of 14750-14800 will be crucial to watch.

The volatility declined as INDIAVIX came off by 9.02% to 20.6500. Tuesday is likely to see the levels of 14650 and 14700 acting as resistance points. The supports come in at 14450 and 14410 levels.

The Relative Strength Index (RSI) on the daily chart is 43.52; it is neutral and does not show any divergence against the price. The daily MACD is bearish and stays below its signal line.

The pattern analysis shows the NIFTY having a pattern support near immediate low point near 14250 levels. This exists in form of a falling trend line of a small declining channel that the Index has formed. On the move up, it has immediate resistance at 50-DMA on a closing basis.

All and all, the Indian equities are set to see higher opening in the Tuesday’s trade. However, with all likelihood that the opening would be near the important resistance levels, there are also possibilities of some profit-booking from higher levels. It is suggested that the initial strong opening, if at all it happens, should be utilized more for protection of profits at higher levels. Fresh purchases, if any, should be made on a highly selective note as the markets are likely to continue exhibiting a stock-specific setup. A selective and cautiously positive approach is advised for the day.

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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