Much on the anticipated lines, the NIFTY failed to sustain its gains and came off from its high point before ending the day with a minor loss. The markets had a strong start to the day; the opening stayed better than what the Asian trade setup and the SGX suggested. The NIFTY got stronger as the day progressed and tested the crucial resistance point of 15900. The index spent some time there trading in a capped range but eventually it was not able to move past that point. A selling pressure gripped the markets as the NIFTY came off over 100-points from its high point of the day. It pared all its gains and slipped into the negative territory. The headline Index finally ended with a net loss of 16.10 points (-0.10%).
Tuesday’s session once again reinforced the credibility of the resistance zone of the 15850-15900 area; as of now, this remains the major hurdle for the markets to cross. The options data also suggest heavy Call OI accumulation near the 16000-level making it the strongest resistance point even if the NIFTY is able to take out the 15900 levels. The market breadth remained evidently weak as 31 out of 50 stocks declined. Had the stock of HDFCBANK had not advanced, the Index was in for deeper trouble in Tuesday’s trade.
The volatility remained nearly at the same levels; INDIAVIX rose marginally by 1.71% to 12.2700. NIFTY continues to face resistance at 15850 and 15900 levels. Supports come in at 15730 and 15680 levels.
The Relative Strength Index (RSI) on the daily chart is 60.21; it stays neutral and does not show any divergence against the price. The daily MACD is bearish and remains below the signal line.
A Doji occurred on the candles. It also has a long upper shadow which makes it predominantly bearish. If the present candle is examined with reference to pattern analysis, it has reinforced the credibility of the 15850-15900 zone as a stiff resistance area for the markets.
All and all the markets are now getting entirely stock-specific. Their performance of the economy-facing high beta stocks is likely to remain weak. However, we may again see some pickup in the defensive stocks. However, on a broader note, the markets will remain more stock-specific rather than sector-specific until the weekly options expiry. While keeping the analysis on similar lines to yesterday, we suggest continuing to approach the markets on a highly selective note while protecting profits at higher levels.
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)
