It was a day of strong consolidation once again for the Indian equities as they struggled to hold on to pattern support while they ended the day with a modest cut. The markets saw a positive start to the day; however, it soon drifted into the negative territory. The NIFTY continued to get weaker as it slipped below the psychologically important 16000 levels. The second half of the session saw the markets recovering from the low point of the day. After rebounding some 175-odd points from the low of the day, the headline index ended with a net loss of 72.95 points (-0.45%).
We head into the weekly options expiry on Thursday, the session will remain typically influenced by the options expiry dominated moves. Apart from this, the NIFTY has been able to keep its head above 16000 levels; the price action of NIFTY against the zone of 16000-16100 will be extremely important to watch. There has been heavy PUT writing seen at 16000; unless there are any heavy overnight negative cues to deal with, there are greater chances that the NIFTY may defend 16000 levels. Fresh shorts are again seen in the system as the NIFTY current month futures added over 6.40 lakh shares or 6.23% in OI; this addition of the OI has come with the decline in NIFTY, and this confirms the addition of fresh shorts in the system.
Thursday is likely to see the levels of 16230 and 16315 acting as immediate resistance points; the supports come in at 16050 and 15960 levels.
The Relative Strength Index (RSI) on the daily chart is 31.80; it has made a new 14-period low which is bearish. However, it also remains neutral and does not show any divergence against the price. The daily MACD is bearish and stays below the signal line.
The analysis once again continues to remain on similar lines. The NIFTY has respected the pattern support trend line that begins from the low point of 15671 and joins the subsequent higher low on the charts. The markets continue to have short build-up in the system; the present derivatives data does not offer any shorting opportunities as the risk-reward ratio remains largely unfavorable. It is recommended to keep buying the dips and focus on the relatively stronger pockets and the low beta defensive universe.
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)
