After a strong technical rebound in the previous session, the Indian equities chose to consolidate as it ended the trading day with a modest cut. The NIFTY opened on a positive note; it marked its high point in the early minutes of the day. It tested the 18000 levels and expectedly found some resistance there. The markets gradually pared their opening gains to slip in the negative. For the most part of the session, the NIFTY did not take any directional view although it traded with a negative bias. Some weakness was seen in the late afternoon trade which was followed by a modest recovery from lower levels. The NIFTY ended the day losing 40.70 points (-0.23%).
Markets have a couple of factors to deal with this week. First, the FOMC meet starts today; the taper worries, the outcome of the meet that will come Wednesday night, and the commentary is something that the markets will react to. Additionally, Wednesday is practically the last workday of the week as Thursday will be just a symbolic one-hour Mahurat trading session. Given this thing, we will have weekly options expiry happening on Wednesday instead of usual Thursdays. Given the options data, it is seen that the NIFTY is likely to stay range-bound with the levels of 18000 acting as resistance on the upside.
Volatility declined; INDIAVIX came off by 1% to 17.0625. Wednesday is likely to see the levels of 17930 and 18000 acting as resistance points. Supports come in at 17800 and 17745 levels.
The Relative Strength Index (RSI) on the daily chart is 49.82; it stays neutral and does not show any divergence against the price. The daily MACD is bearish and it is below the signal line.
A black body emerged on the candles; apart from this, no other formations were noticed on the candles.
The fabric of the markets has been highly stock-specific over the past couple of weeks. It is likely to remain this way at least for the immediate near-term. We are unlikely to see any sectoral dominance from the relative performance point of view. In fact, we will see those stocks outperforming whose results are out of the way, and whose Relative Strength against the broader markets is improving. The MidCap universe is likely to continue to show relative outperformance against the broad market index. We recommend continuing to stay highly stock-specific, avoid shorts, and keep leveraged positions to modest levels. A cautiously positive outlook 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)
