On a weekly options expiry day, the Indian equities had a strong trending day as they opened strong, got better as the day progressed, and ended the day on a strong note. The NIFTY saw itself opening comfortably above the crucial 200-DMA. It maintained its gains in the morning session. As the day progressed the markets got even stronger. The index, in the process, kept marking gradual incremental highs and managed to close near the high point of the day. There was no sign of profit-taking at any point in time. The headline index closed with a net gain of 256.05 points (+1.49%).
The weekly options expiry took place today; in the previous note, it was mentioned that the level of 17200 had the second-highest call OI accumulation. Since the markets opened well above that, they trended strongly towards the 17400 levels. The highest call writing was witnessed at this point; this prevented the NIFTY stay a notch below this level. Importantly, the NIFTY has managed to hold on to the 200-DMA as its important support on a closing basis. The 200-DMA stays at 17185. The monthly options expiry data shows that the upsides may get capped near 17500 which holds the maximum Call OI accumulation as of now. However, this is very indicative; if the up move gets extended, then the price action of NIFTY against the level of 17500 will be crucial to watch.
Friday is likely to see a quiet start to the day. The levels of 17440 and 17500 will act as probable resistance points. The supports come in at 17280 and 17185 levels.
The daily RSI is 5135; it stays neutral and does not show any divergence against the price. The daily MACD is bearish and stays below the signal line. A rising window emerged on the candle; this usually resolves in the direction of the trend.
The pattern analysis shows that after a brief violation of the 200-DMA, the NIFTY has managed to crawl back above this point. The 200-DMA presently stands at 17185 and is likely to remain a crucial support point for the NIFTY in the near term on a closing basis.
All in all, the defensive play in the markets was evident. In the coming session as well, we will continue to see pockets like PSE stocks, FMCG, Consumption, IT, and Pharma doing relatively well than the rest of the population. We recommend continuing to stay selective and keep leveraged exposures on a modest level. Until and unless the levels of 17500 are not taken out comprehensively, vigilant protection of profits is advised.
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)
