It was a day of positive consolidation for the markets; the NIFTY opened higher, got stronger during the day, came off from its highs but maintained its opening gains to close in the positive zone. Following a favorable global trade setup, the Indian equities saw themselves opening on a positive note. The NIFTY traded in a narrow range until afternoon though it maintained its gains. The afternoon trade saw the markets getting stronger; the index went well past 17844 levels. However, NIFTY came off from its high point of the day. The markets managed to close near their opening levels; the benchmark index closed with gains of 144.35 points (+0.82%).
The weekly options expiry influenced the session. The 17800 strikes continued to witness high Call writing; this made the markets unable to sustain above this point and also prevented NIFTY to settle above 17800 levels. From the technical perspective, the 17800 remains an important resistance point within the broad 17450-17950 consolidation zone that the markets have created. Also, Wednesday’s high point of 17884 also remains an important level to watch. If any fresh thrust on the upside has to come, it would be very important for the NIFTY to move past the 17800 levels and sustain above that point.
Volatility continued to slide; INDIAVIX came off by 6.79% to 16.1550. Friday may see a quiet start to the day. The levels of 17835 and 17900 will act as likely resistance points for the markets. The supports come in at 17740 and 17680 levels.
The Relative Strength Index (RSI) on the daily chart is 63; it remains neutral and does not show any divergence against the price. The daily MACD is bearish and below its signal line. A spinning top emerged on the candles. This is a type of candle with a small real body; this is formed because of a very little difference between the open and the close of the session. From the market psychology point of view, this also reflects the indecisive behavior of the market participants.
While the markets remain in the broad consolidation zone, it has tried to create a small congestion range for itself. This makes the level of 17600 and 17890 very important to watch as any slip below 17600 will take the NIFTY again to the lower edge of the consolidation range, i.e., 17400-17450. On the other hand, if the markets have to their high point again, moving past Wednesday’s high point of 17884 will be critically important. We recommend continuing to navigate the markets with a stock-specific approach. Just what has been advised throughout the week, profits should be protected on either side while keeping overall exposures at modest levels.
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)
