Very much on the anticipated lines, the three-day short trading week saw the markets trading on a corrective note. The last trading day of the week, i.e., Wednesday, also saw the Indian equity markets turning cautious in the second half of the session and ending the day in the negative territory. The NIFTY saw a better-than-expected opening; it opened positive and inched higher to mark the high point of the day in the first half of the trading session. However, after that, the NIFTY started to gradually give up the gains. At one point in time in the afternoon trade, it slipped into the negative zone. Markets grew weaker after that and ultimately ended the day with a net loss of 54.65 points (-0.31%).
Since Friday was a trading holiday for the global markets as well, the Indian markets will open and adjust to one day of global trade that it missed on Thursday. Having said that, there are possibilities of the NIFTY opening on a mildly negative note. In the same breath, the derivatives data show that the markets may attempt a technical pullback from the current levels. Also, all the three key DMAs, i.e., 50-, 100-, and 200-DMA fall in a 150-point range from 17158-17296. This makes this 150-point zone a strong support area on a closing basis for the NIFTY.
Monday is likely to see the levels of 17540 and 17690 acting as probable resistance points. The supports come in at 17400 and 17330 levels.
The Relative Strength Index (RSI) on the daily chart is 52.23; it remains neutral and does not show any divergence against the price. The daily MACD has shown a negative crossover; it is bearish and trades below the signal line.
The pattern analysis shows that the NIFTY failed to break above the 18000 levels convincingly; it witnessed corrective retracement after trying to move past this point. This makes the zone 18100-18200 a stiff resistance zone for the markets. On the other hand, the 150-point zone of 17150-17300 is a strong support area for the markets as it has all the three key moving averages in close vicinity of each other within this zone. This translates into a 700-point trading range for the NIFTY in the near term.
All in all, the NIFTY April futures have added over 3.21 lakh shares or 3.46% in net open interest. This increase in OI has come with the decline in the index. This means that fresh shorts have been created; if the NIFTY moves down, this may lend support to markets at current or lower levels. The NIFTY may see a resilient start; even if it gets a bit weaker start on Monday, the markets may see improvement from current or lower levels. It is recommended to avoid shorting the markets at current levels. A highly stock-specific approach is advised; downsides may be used to buy good quality low beta stocks at lower 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)
