The FOMC outcome turned out less hawkish than what the markets had expected; this led to a remarkably strong rebound from lower levels for the global equities. However, the Indian equity markets grossly underperformed its peers; spent the day in a range and ended the day on a modestly positive note. After opening with a gap up, the NIFTY gradually declined and gave up all its gains by afternoon as the session remained thoroughly controlled by weekly options expiry. After slipping in the red in the afternoon, the markets moved nowhere and spent the remaining part of the session in a defined range. The benchmark index finally ended with a nominal gain of 27 points (+0.16%).
The markets have virtually failed to keep up with the positive undertone of the global markets. It is because of the weekly options expiry that highly influenced the session on Thursday. Apart from that, the NIFTY is still a notch below the 100-DMA and the short-term 20-DMA. They stand at 17305 and 17310 respectively. If the NIFTY manages to crawl above these points, we may see some upward momentum returning in the markets. The opening of the market and the intraday trajectory that it may form after that will decide the trajectory for the day. The level of 17300 will have to be moved past convincingly by the markets if it has to resume its upward momentum.
Friday is likely to see a stable start to the day. The levels of 17300 and 17385 are likely to act as resistance points. The supports come in at 17180 and 17100 levels. The trading range is likely to stay a bit wider than usual.
The Relative Strength Index (RSI) on the daily chart is 44.35; it continues to remain neutral and does not show any divergence against the price. The daily MACD is bullish and trades above the signal line. A black body emerged on the candles; apart from this, no other major formations were seen on the charts.
The markets have been more stock-specific than ever; it is likely to continue to remain like this for some more time. There are very few chances of any particular sector or theme playing out in the markets. Apart from this, there is a large number of shorts that still continue to exist in the system. Given the F&O data and looking at the current technical setup, we recommend avoiding creating shorts in the markets. Any downside, if any, should be used to make highly selective and stock-specific purchases. A cautiously positive 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)
