On the expected lines, the NIFTY continued with its up move as it extended its gains. The Indian equities opened positive and stayed in the positive territory while ending the day with gains. After opening with gains, NIFTY gave up the bulk of its gains in the morning session; however, it continued to stay in the green. The afternoon trade saw the index recovering from the day’s low point. The NIFTY not only recouped the lost levels but also marked a fresh incremental high point of the day. It did come off from those levels but spent the remaining day in a capped range. NIFTY finally closed with a net gain of 117.15 points (+0.69%).
While the markets extended their gains, the session remained in line with the weekly options expiry data. The highest Call OI accumulation that was seen at 17200 came down to 17100 thus stopping NIFTY’s advance below 17100. Furthermore, the Index has also tested its small pattern resistance which exists near 17150. However, we may see the markets entering into some short-term turbulence zone which may cause the index to consolidate. The nearest important level for the NIFTY to tackle will be the short-term 20-DMA which presently stands at 17148. Unless the NIFTY moves past this level, it remains vulnerable to some consolidation once again.
Friday is likely to see a quiet start to the day. The levels of 17150 and 17230 will act as immediate resistance levels. The supports come in at 17065 and 17000 levels.
The Relative Strength Index (RSI) on the daily chart is 45.13; it remains neutral and does not show any divergence against the price. The daily MACD is bearish and below the signal line. However, the slope of the Histogram is narrowing and this may take the indicator towards a positive crossover over the coming days.
A spinning top occurred. Such kind of a candle shows the indecisiveness behavior of market participants. A rising window also occurred because of a gap. Usually, such formations resolve with a continuation of the prior trend; however, this will need confirmation on the charts.
All and all, the levels of 16410 have marked itself as the most immediate short-term bottom for the markets. The NIFTY has neared resistance zone; it would be very crucial to see how the Index behaves near the 20-DMA which presently stands at 17148. It is reiterated that shorts should be avoided and all downside moves should be utilized to make select purchases. A 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)
