In line with the overnight global trade action, the Indian equities halted their five-day corrective decline as it staged a strong pullback while ending with gains. The NIFTY saw a weak opening; after the open, the index was down over 250-odd points at one point in time. However, after marking the low point of 16836, NIFTY staged a sharp recovery to crawl back inside the positive territory. It slipped in the negative zone again, but as the day progressed, it went on to put some incremental gains. The markets saw the Index rebounding over 470-points from the low point; eventually, it ended the day with a net gain of 128.85 points (+0.75%).
The markets will open on Thursday after a gap of one day as the markets were closed on the account of the Republic Day holiday. As the markets open on Thursday, they will adjust to the global trade setup. The global trade setup will also stay influenced by the FOMC outcome/comments; Indian markets will be no exception as they too will react to these things. This Thursday, there is also the currently monthly derivative expiry lined up; the session will also stay dominated by the rollover-centric activities. The weekly options data indicate maximum Call OI built up at 17500; unless a tactical shift occurs, this level will stay a strong resistance point for the markets.
Thursday is likely to see a jittery start to the day; the levels of 17300 and 17430 acting as immediate resistance points. The supports come in at 17180 and 17000 levels. The trading range is expected to stay a little wider than usual.
The Relative Strength Index (RSI) on the daily chart is 40.38; it is neutral and does not show any divergence against the price. The daily MACD is bullish and remains below the signal line.
The pattern analysis shows that the NIFTY has tried to take support on a falling trend line pattern support; this trend line begins from the high point of 18600 and joins the immediate lower top. Presently, the index trades below the 20-, 50-, and 100-DMA levels.
All in all, even if the technical pullback continues, it would be prudent to stay away from creating any aggressive positions until some stability in the markets is seen. There are strong possibilities that despite some technical pullback and some gains, the markets may again see some corrective moves from the higher levels. Though the markets may have attempted to find some stability, there are no clear signs of corrective moves taking any breather. It would be prudent to wait for such signs; until then, a highly selective 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)
