Continuing to correct for the third day, the Indian equity markets ended the day with a loss despite a rebound from lower levels. The markets opened on a positive note and marked the day’s high in the opening minutes of the trade. NIFTY soon pared its gains to trade flat in the first hour of the day and then slipped in the negative territory. The corrective pressure on NIFTY continued and at one point in time, it went very close to the 18000 levels while it marked the day’s low point at 18048. The index saw itself rebounding some 13-odd points for lower levels before closing the day with a net loss of 88.50 points (-0.48%).
The NIFTY took 10 days to pile up its last 1000 points of gains; it took nearly three days to shed 600 points out of it at one point in time. Given this kind of wide-ranging corrective moves, Thursday’s session has remained technically important from one perspective. With the markets rebounding from near the 18000-levels, the consolidation range has now defined itself as the 18000-18600 zone. We will not see any runaway up move unless the NIFTY moves past 18600, and we will also not see any major downside so long as the NIFTY keeps its head above 18000 levels.
Friday is likely to see a stable start to the day; we might see the markets trying to stabilize themselves and attempt a technical pullback. The levels of 18235 and 18300 will act as resistance points. The supports will come in at 18100 and 18050 levels.
The Relative Strength Index (RSI) on the daily chart is 63.01; it stays neutral and does not show any divergence against the price. The daily MACD is bullish and above the signal line. Apart from a black body that was formed, no major formations were seen on the charts.
The NIFTY has defined a broad trading range for itself between the 18000-18600 zone. This means that NIFTY is likely to find supports near 18000 and may not see any major downsides so long as it keeps its head above 18000 levels. We might continue to see technical pullbacks happening near the lower edge of this zone. We recommend continuing to maintain controlled exposures in the markets. While avoiding aggressive shorts, all profits on either side should be vigilantly protected. Leveraged exposures should be kept modest; a cautious outlook 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)
