The markets continued to inch higher; at the same time, it halted their move near the key resistance areas that fall near the lifetime high for the NIFTY. Following a stable start, as expected, the NIFTY stayed above the crucial 17800 levels. It was because of this that it was able to maintain gains and close well above this level. Despite staying in the positive for the entire day, the intraday directional bias was largely range-bound. The NIFTY oscillated in a 70-point range throughout the day. The Index had pared its gains in the afternoon trade at one point in time but it manage to recover those gains again towards the end of the session. The headline index ended with net gains of 104.85 points (+0.59%).
The NIFTY has closed very near to its lifetime high point of 11947. One strong move and we will see the index marking fresh highs again. We are likely to see a tepid start to the day on Monday; the F&O data continues to point at the existence of inherent strength in the markets. Friday’s move has seen the addition of fresh long positions. This is reflected from the NIFTY October futures which added over 4.56 lakh shares or 3.72% in Net Open Interest. In case of any subdued start, Indian markets may once again show resilient behavior against their peers.
Monday is likely to see the levels of 17950 and 18090 acting as immediate resistance points. The supports come in at 17850 and 17790 levels.
The Relative Strength Index (RSI) on the daily chart stands at 65.74; it remains neutral and does not show any deviation against the price. The daily MACD is bearish and remains above the signal line.
The pattern analysis shows that the NIFTY has marked a small double top formation on the daily chart. Any thrust above 17900 levels will help NIFTY test it’s previous high point and inch higher. Until this happens, we may expect minor consolidation in an extremely range-bound manner.
All and all, the inherent strength in the markets remains intact. It was mentioned in the previous technical note that the NIFTY will get a fresh impetus and strength to move higher if it moves past 17800 levels. While the NIFTY moved on these expected lines, it has also shown the existence of internal strength in itself. Given the present technical setup, even if some minor consolidation occurs, it is recommended not to short the markets at current levels. While continuing to keep purchases selective, 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)
