In a listless day of weekly options expiry, the Indian equities traded in a range and ended the day with a nominal loss. The NIFTY opened on a positive note; it got stronger in the morning trade to mark the high point of the day. A corrective move followed not only saw the markets paring all the opening gains but also saw it drifting in the red while it marked the low point of the day. Once this entire trading range was established, the NIFTY spent the entire session oscillating in this range without adopting any directional bias. At the end, the headline index finally ended the day with a net loss of 17.60 points (-0.10%).
The session was evidently influenced by the weekly options expiry. The level of 17500 saw the highest accumulation of Call OI throughout the day; this prevented the NIFTY from sustaining near that point. On the other side, high Put Writing at lower levels lent the support that the markets required and this kept the market in a defined range. The volatility surged; INDIAVIX rose by 6.85% to 22.0050. The zone of 17400-17500 not only sees high call writing done, the zone of 17500-17650 also has two important resistance points. This has made the zone of 17500-17650 a major resistance area for the markets going ahead from here.
Friday is likely to see the levels of 17385 and 17450 acting as potential resistance points. The supports come in at 17210 and 17150.
The RSI on the daily chart is 47.17; it continues to remain neutral and does not show any divergence against the price. The daily MACD is bearish and remains below the signal line. Apart from a black body that emerged, no other formations were noticed on the charts.
The pattern analysis suggests that the NIFTY has continued to resist the 50-DMA for some time; this level presently stands at 17465. It also has 100-DMA at 17623; this implies that for any meaningful extension of the technical pullback, moving past this zone convincingly will be crucial.
Another important thing to note is the massive pullback that was witnessed following the easing of geopolitical tensions, that pullback was fueled mainly by short-covering. Over the coming days, it is necessary that fresh buying supported moves come in which would be in fact healthy for the markets. The markets are likely to continue trading in a defined range; it is recommended to protect profits vigilantly on either side and continue to approach the markets on a highly selective note.
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)
