The Indian equities performed much better than expected as it went on to end with yet another day of gains. The opening of the market remained resilient; they opened on a modestly positive note. However, the index soon slipped in the red in the first hour of the trade to mark the day’s low point. NIFTY crawled back in the positive territory again and stayed in the positive territory throughout the day. The NIFTY took no major directional bias but maintained its modest gains while trading in a very defined range. The headline index ended the day with a modest gain of 52.45 points (+0.29%).
Although the NIFTY ended the day with again, it looks like it may take some breather at current levels. The NIFTY has managed to keep its head above the 18000 levels; so long as the NIFTY stays above this point, it will continue to make efforts to inch higher. Any slip below the 18000 levels will push the markets into some consolidation. The Options data does not present any clear picture, the maximum Call OI has shifted higher to 18500 levels. Further to this, Call unwinding is seen at 17900 and 18000 levels; this hints at underlying buoyancy of the markets.
Wednesday is likely to see the levels of 18105 and 18165 acting as immediate resistance points. The supports come in at 18000 and 17910 levels.
The Relative Strength Index (RSI) on the daily chart is 65.74; it shows a mild bearish divergence against the price. The daily MACD is bullish and remains above the signal line. No major formations were noticed on the candles.
The pattern analysis shows that the NIFTY is continuing to track the upper Bollinger bands that are expanding; the lead indicators are seen mildly diverging from the price action. This may not mean much at the current stage, however, it may mildly hint towards the market taking some breather after a strong technical pullback.
Overall, the analysis for Wednesday continues to remain on similar lines. The price action of NIFTY against the levels of 18000 will decide the trend over the next few coming days. If the NIFTY slips below the 18000 levels, we may see the markets getting pushed into some consolidation again. So long as the index is above this point, inherent buoyancy will be on display. In either case, it is recommended to avoid creating shorts. 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)
