On a disappointing day of trade, the equity markets opened lower, got weaker as the day progressed, and closed the session on a weak note. The NIFTY saw a negative opening; after opening in the negative territory, the index tried to recover some of its opening losses. The markets continued to trade with a loss but in a capped range until the afternoon. The second half of the session saw some more weakness creeping in; the NIFTY slid further in the last hour and half of the trade. The headline index finally ended with a net loss of 220.65 points (-1.27%).
The markets are not able to bounce back and sustain well above the 200-DMA is a matter of concern; the 200-DMA presently stands at 17193. As of Friday’s close, the NIFTY has closed just a notch below this point. The longer the NIFTY does not bounce back from here, the higher will be the possibility that the NIFTY may end up violating the crucial support. In the event of any likely negative opening, so long as the NIFTY does not crawl above 200-DMA again, it will end up resisting this level on a closing basis.
Monday is likely to see a tepid start to the day. The levels 17200 and 17340 will act as probable resistance points. The supports come in at 17100 and 17020 levels.
The Relative Strength Index (RSI) is 46.87; it is neutral and does not show any divergence against the price. The daily MACD is bullish and stays below the signal line.
The pattern analysis shows that the NIFTY is hovering around the 200-DMA which is one of the most crucial pattern support for the markets on a closing basis. If the markets do not bounce back effectively from the current levels, it is creating higher possibilities of a violation of this crucial support.
Overall, the NIFTY is yet to show any major resumption of any directional move; this will happen only if the NIFTY meaningfully bounces off from the current levels or comprehensively violates the 200-DMA. Until either of these two scenarios happen, we will see the NIFTY oscillating in a broadly defined range and will stay vulnerable to profit-taking bouts at higher levels. A continued cautious approach 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)
