While continuing to trade on the expected lines, the Indian equity markets continued to modestly correct and end the day on a negative note. The NIFTY opened on a positive note, and after trading positive in the opening minutes of the session, it soon slipped in the red. However, the markets rebounded to trade in the green once again; it stayed in a limited range though and did not take any directional bias throughout the day. While no clear trend was established during the day, the benchmark index NIFTY50 closed with a modest loss of 43.90 points (-0.25%).
The markets remain trapped in a corrective mode; this is more of a narrow congestion zone created within a broad consolidation range. On the higher side, there is a 100-DMA level of 17648 followed by the 20-DMA which stands at 17737. On the lower side, the 50-DMA which is at 17438 stands as a more important and immediate support for the markets on a closing basis. The index will not take any sustainable directional bias so long as it is between 17400-17700; it will continue to oscillate in a defined and narrow range.
Monday is likely to see a quiet start to the day; the levels of 17580 and 17630 will act as potential resistance points. The supports will come in at 17410 and 17350.
The Relative Strength Index (RSI) stands at 48.51; it remains neutral and does not show any divergence against the price. The daily MACD is bearish and below the signal line. A black body emerged on the candles; apart from this, no other formations were seen.
The pattern analysis shows that the NIFTY resisted to the extended trend line which happens to be the neckline resistance of the bearish head and shoulders pattern that the index had formed earlier. On the lower side, it has taken support on the falling trend line pattern support as evident from the chart.
The trend for Monday is likely to stay on similar lines as the previous session. We may find the markets trading in a defined range; it would be crucial for the NIFTY to defend the 50-DMA on a closing basis failing which we may see some more weakness creeping into the markets. The NIFTY PCR across all expiries is at 0.90 and looks evenly placed. It is recommended to continue avoiding shorts and use opportunities to make quality purchases. The pockets like select banking, financial, auto, oil & gas, and PSE may relatively outperform the broader markets.
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)
