The equity markets continued to consolidate for the sixth day in a row while the NIFTY ended the day with minor gains. Markets saw a positive start to the session. The NIFTY opened higher, but it formed its intraday high point in the first hour of the trade. After that, the entire session saw the markets very gradually paring their opening gains. While no major weakness was seen, the NIFTY gave up the bulk of its gains by the end of the session. The final hour saw a range-bound trade; the headline index ended with gains of 24.70 points (+0.14%).
The market breadth remained reasonably good as 34 of the NIFTY stocks ended on a positive note. However, the F&O data shows a mixed picture. The level of 17450 saw maximum call writing in the session. However, it is the level of 17400 that holds the highest concentration of Call open interest. This means that there are modest chances that the NIFTY may try and test 17450 levels; but for this to happen, it will be crucial for the index to be able to move past the 17400 levels. Until this happens, the markets will continue to consolidate.
The INDIAVIX slipped by 3.20% to 13.5750. Wednesday is likely to see a stable start but the levels of 17400 and 17445 are likely to act as potential resistance points. The supports come in at 17300 and 17245.
The Relative Strength Index (RSI) on the daily chart is 81.20; it continues to remain neutral and does not show any divergence against the price. The RSI stays in the overbought zone. The daily MACD is bullish and above the signal line. Apart from a black body that emerged on the candle, no other major formation was noticed.
The pattern analysis of the daily chart shows that the NIFTY has created a new basing point near 17200. It has been creating such basing points after intermittent consolidation as the NIFTY has kept rising following its major breakout from the 15900-15950 zones.
The analysis continues to remain on similar lines; the markets will continue remaining highly stock-specific in nature. We expect the sectors that have relatively underperformed off late to try and continue improving their relative strength against the broader markets. These include select stocks from banks, realty, auto, and IT. While no sectoral dominance may be seen, stock-specific performance is likely to dominate the trading landscape on Wednesday. While continuing to guard profits at higher 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)
