The consolidation continued in the Indian equity markets; though it looked a bit weaker than usual days of consolidation. The NIFTY saw a quiet start to the day; it stayed in a very narrow range until afternoon where it traded positive with modest gains. However, the second half of the session saw the Index getting weaker. The NIFTY pared its modest gains and slipped in the red. It stayed in a declining trajectory and finally ended with a net loss of 93.15 points (-0.53%).
Thursday’s session not only saw the month closing with a gain of 485.95 points (2.84%), but it has also seen the quarter ending with gains of 1896.55 points (+12.06%). Not only this, this quarter included, NIFTY has ended with gains for 6 Quarters in a row. The monthly expiry went off quietly; the technical setup shows that the NIFTY may continue staying in a defined and broad consolidation while sectoral outperformance shall continue. Volatility eased a bit; INDIAVIX declined by 2.31% to 18.4025.
Friday is likely to see a quiet start to the day; the levels of 17680 and 17750 will act as likely resistance points. The supports come in at 17560 and 17500 levels.
The Relative Strength Index (RSI) on the daily chart is 63.14; it has made a fresh 14-period low which is bearish. The RSI also shows a mild negative divergence against the price. The daily MACD is bearish and does not show any divergence against the price.
While having a glance at the pattern analysis on the daily chart, it appears that the zone of 17900-17950 has become an intermediate top for the markets. Given the most recent price action, the Index has dragged its resistance points lower at 17800.
All in all, the technical setup suggests that the NIFTY has now immediate resistance t 17800. There translates formation of a broad consolidation range getting formed between 17500-17950 levels. The present behavior of the NIFTY may continue for some more time; it is very much likely that the NIFTY continues to consolidate and we see other sectors like Auto, PSE, PSU Banks, etc., improve on their relative performance against the NIFTY. It is recommended to continue staying highly stock-specific and stay light on overall exposures.
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)
