Following three days of a technical pullback and after halting near the key resistance points, the Indian equity markets took a rude jolt on Friday as they corrected and ended the day on a negative note. The markets saw a negative opening; they opened with a gap down and grew weaker as the day progressed. The mid-session saw some recovery but that did not sustain much and got sold as well. The headline index took support near the 17300 levels; however, it continued to end negative with a net loss of 231.10 points (-1.31%).
The global trade setup remains weak; NIFTY will see a challenging start to the new week. However, a sharp breakout again in the Crude Oil will see the Oil & Gas space trying to relatively outperform. The strong retracement of the NIFTY from near the 20-DMA which presently stands at 17566 followed by the 100-DMA at 17642 makes a strong resistance for the NIFTY. Unless the NIFTY moves past the 17560-17640 levels; i.e. unless it moves pat 17650, there are literally no chances of any runaway move happening in the markets. On the lower side, 17000 remains the nearest important pattern support for the markets. Following Friday’s correction, the NIFTY has again put itself in a defined 17000-17650 consolidation-cum-trading zone for the immediate near term.
Monday is likely to see a shaky start; the levels of 17430 and 17525 will act as immediate resistance points for the markets. The supports come in at 17280 and 17200 levels.
The Relative Strength Index (RSI) stands at 46.60; it continues to remain neutral and does not show any divergence against the price. The daily MACD remains bearish and below the signal line. Except for a black candle that appeared on the chart, no other formations were noticed.
On the daily timeframe, the NIFTY appears to be in a very wide trading range and may look bearish as a result of gaps on either side; however, on the higher timeframe charts, there is no structural weakness seen. This means that while the NIFTY remains in a broad but clearly defined trading range, all downsides should be used to pick select good quality stocks. Some defensive stances in the markets may be visible, but there are chances of some good quality financial, PSU banks, auto, and pharma stocks to show resilience performance. While continuing to stay light on overall positions 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)
